1 MEETING
2 BEFORE THE
3 CALIFORNIA AIR RESOURCES BOARD
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10 BOARD HEARING ROOM
11 2020 L STREET
12 SACRAMENTO, CALIFORNIA
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19 THURSDAY, JULY 24, 1997
20 9:30 A.M.
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25 Vicki L. Medeiros, C.S.R.
License No. 7871
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MEMBERS PRESENT
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John D. Dunlap, III, Chairman
3 Joseph C. Calhoun
Dr. Friedman
4 Lynne T. Edgerton
M. Patricia Hilligoss
5 Barbara Riordan
Ron Roberts
6 James W. Silva
7 Staff:
8 Michael Kenny, Executive Director
Tom Cackette, Chief Deputy Executive Officer
9 Mike Scheible, Deputy Executive Officer
Kathleen Walsh, General Counsel
10 Jim Schnoning, Ombudsman
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I N D E X
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Page
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Proceedings 1
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Call to Order 1
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Pledge of Allegiance
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Roll Call
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Opening remarks by Chairman Dunlap
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AGENDA ITEMS:
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97-6-1 Public Hearing to Consider Adoption
11 of the New Certification Tests and
Standards to Control Emissions from
12 Aggressive Driving and Air Conditioner
Usage for Passenger Cars, Light Duty
13 Trucks and Medium-Duty Vehicles under
8,501 Pounds Gross Vehicle Weight
14 Rating
15 Introductory remarks by Chairman Dunlap 2
16 Staff Presentation:
17 Mr. Kenny 3
Ms. Kwan 5
18 Mr. Schoning 19
19 Public Comments:
20 Mr. Heiser 21
Mr. Dana 23
21 Mr. Heiser 31
22 Questions/Comments 36
23 Mr. Millerick 47
Mr. Bohanan 49
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Questions/Comments 53
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I N D E X (Continued)
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97-6-2 Public Meeting to Consider a
5 Draft Report, Planned Air Pollution
Research, 1997 Update
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7 Introductory remarks by Chairman Dunlap 64
8 Staff Presentation:
9 Mr. Kenny 65
Mr. Propper 73
10 Dr. Holmes 80
Ms. Parsley 81
11 Mr. Ahuja 85
12 Questions/Comments 94
13 97-6-3 Public Meeting to Consider a
Research Proposal
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Introductory remarks by Chairman Dunlap 95
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Staff presentation:
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Dr. Holmes 96
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Questions/Comments 96
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19 Afternoon Session 98
20 97-6-4 Public Hearing to Consider Adoption
of Proposed Amendments to the
21 California Consumer Products regulation
22 Introductory remarks by Chairman Dunlap 98
23 Staff Presentation:
24 Mr. Kenny 99
Ms. Kasper 101
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Questions/Comments 129
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I N D E X (Continued)
2 Page
3 Mr. Schoning 133
4 Public Comment:
5 Mr. Thompson 134
Ms. Beckley 139
6 Mr. Haluza 141
Mr. Meguiar 148
7 Mr. Silver 160
Mr. Holloway 164
8 Mr. Burnett 167
Ms. Jordan 176
9 Mr. Streichenberger 178
Mr. Marchese 184
10 Mr. Lane 188
Mr. Williams 193
11 Mr. Lowe 195
Mr. Bohanan 198
12 Mr. Halton 201
Ms. Hill 204
13 Mr. Schreiber 205
Mr. Dykstra 206
14 Mr. Brewer 207
Mr. Stein 208
15 Mr. Graham 210
16 Question/Comment 212
17
Open Session to Provide an Opportunity for
18 Members of the Public to Address the Board
on Subject Matters within the Jurisdiction
19 of the Board 227
20 Adjournment 228
21 Certificate of Reporter 229
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1 P R O C E E D I N G S
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3 CHAIRMAN DUNLAP: Will the July meeting of the
4 California Air Resources Board now come to order.
5 Supervisor Riordan, lead us in the Pledge of
6 Allegiance.
7 (Thereupon the Pledge of Allegiance was
8 led by Supervisor Riordan.)
9 CHAIRMAN DUNLAP: Thank you.
10 Would the Board Clerk please call the roll.
11 MS. HUTCHENS: Calhoun.
12 MR. CALHOUN: Here.
13 MS. HUTCHENS: Edgerton.
14 MS. EDGERTON: Here.
15 MS. HUTCHENS: Friedman.
16 DR. FRIEDMAN: Here.
17 MS. HUTCHENS: Hilligoss.
18 MAYOR HILLIGOSS: Here.
19 MS. HUTCHENS: Parnell.
20 Patrick.
21 Rakow.
22 Riordan.
23 SUPERVISOR RIORDAN: Here.
24 MS. HUTCHENS: Roberts.
25 MR. ROBERTS: Here.
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1 MS. HUTCHENS: Silva.
2 SUPERVISOR SILVA: Here.
3 MS. HUTCHENS: Chairman Dunlap.
4 CHAIRMAN DUNLAP: Here.
5 Thank you.
6 I would like to remind those in the audience who
7 would like to present testimony to the Board on any of
8 today's Agenda Items to please sign up with the Clerk of the
9 Board, on our left, wearing bright red.
10 If you have a written statement, please give 20
11 copies to her.
12 The first item on the Agenda today is 97-6-1, a
13 public hearing to consider adoption of new certification
14 tests and standards to control emissions from aggressive
15 driving and air conditioner usage, passenger cars, light-duty
16 trucks and medium-duty vehicles under 8500 pounds gross
17 vehicle weight rating.
18 The proposal before the Board is a major regulatory
19 item to control exhaust emissions from motor vehicles during
20 aggressive driving and air conditioner usage.
21 These operating conditions are of concern because
22 they are typically associated with very significant emission
23 increases.
24 The proposed regulation will result in tremendous
25 air quality benefits, especially during the summer months
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1 when ozone non-attainment days typically occur.
2 Staff's work in this regulatory item is
3 commendable, given the dedicated effort to balance
4 environmentally protective emission standards with
5 technologically feasible emission controls.
6 Over the past five years, a number of extensive
7 research programs were conducted to develop the proposed
8 emission standards.
9 As a result of this comprehensive effort, the
10 proposed standards have already received support from the
11 motor vehicle industry and are notably more stringent than
12 those adopted recently by the United States Environmental
13 Protection Agency.
14 As with low-emission and clean fuels programs,
15 staff's proposal will lead the Nation in the establishment of
16 low-emitting vehicles, an impact that will carry into the
17 twenty-first century.
18 At this point, I would like to ask Mr. Kenny to
19 introduce the item and begin the staff's presentation.
20 MR. KENNY: Thank you, Chairman Dunlap and Members
21 of the Board.
22 The staff's proposal today is the culmination of
23 over five years of regulatory development. The inclusion of
24 a proposed tests and standards and a certification of new
25 motor vehicles will allow control for exhaust emissions under
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1 all driving conditions.
2 After careful review of the current certification
3 test procedure, it was determined that exhaust are not
4 adequately controlled under certain driving conditions.
5 These emissions are essentially uncontrolled,
6 resulting in excessively high pollutant levels. Since 1992,
7 staff has worked cooperatively with the United States
8 Environmental Protection Agency to develop test procedures to
9 characterize these emissions.
10 The motor vehicle industry has also substantially
11 contributed to the regulatory development by providing
12 extensive testing resources and access to prototype
13 low-emission vehicle data.
14 Through a joint ARB and industry test program, the
15 stringent emission standards for California's ultra
16 low-emission and super low-emission vehicles were developed.
17 Significant air quality benefits are gained through
18 the proposed test and standards, Staff's best estimate is a
19 133 tons per day of reactive organic gases and oxide
20 nitrogens Statewide by the year 2020.
21 Because exhaust emissions during aggressive driving
22 and air conditioning usage are not properly included in the
23 1994 stipulate, the air quality benefits associated with this
24 item should not be considered toward the 1994 State
25 Implementation Plan.
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1 Now I would like to turn the item over to Mrs.
2 Susan Kwan, of Mobile Source Control Division, who will
3 provide background and the basis for the staff's proposal and
4 recommendation.
5 Susan.
6 MS. KWAN: Thank you, Mr. Kenny.
7 Good morning, Chairman Dunlap and Members of the
8 Board.
9 The proposal under consideration would ensure that
10 the certification process for the sale of motor vehicles in
11 California includes testing of exhaust emissions under
12 virtually all driving conditions.
13 The development of the proposed regulation began
14 more than five years ago and has been a cooperative effort
15 among the US EPA, ARB and the motor vehicle manufacturers.
16 The proposed tests and standards would control
17 exhaust emissions for motor vehicles during aggressive
18 driving and air conditioner usage.
19 These operating conditions are common in every day
20 use, especially during the summer months when their air
21 conditioner is frequently used.
22 By controlling these emissions, extremely large
23 emission benefits result. Staff has estimated that a
24 combined 133 tons per day of hydrocarbon and oxide nitrogen
25 emissions would be reduced statewide by the year 2020.
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1 The proposed regulation is very cost effective at
2 under a dollar per pound of pollutant reduced.
3 Before describing staff's proposal some background
4 information on the current certification procedure and its
5 findings regarding this procedure will be provided.
6 During the certification, vehicles must comply with
7 the applicable emissions standards. Compliance with emission
8 standards is determined through the use of the Federal test
9 procedure, or the FTP.
10 The test vehicle is placed on dynamometer, which is
11 somewhat analogous to a large treadmill, and operated through
12 defined speeds and accelerations.
13 The twin-roll dynamometer is limited to moderate
14 vehicle speeds and to accelerations of 3.3 miles per hour per
15 second.
16 At this constant acceleration rate, it would
17 require 18 seconds to accelerate from 0 to 60 miles per
18 hour. The air conditioner is not turned on during the test.
19 Rather air conditioner load on the engine is
20 simulated by increasing the dynamometer load by 10 percent.
21 To conduct the FTP Exhaust Emission Test, the
22 vehicle is driven through specific speeds and accelerations
23 using the LA4 driving schedule.
24 This driving schedule was developed in 1970 to
25 represent a typical urban commuter trip. The LA4 driving
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1 test is shown in this chart.
2 Speed as a function of time. The speeds on the
3 cycle are mostly under 40 miles per hour with a maximum of 57
4 miles per hour.
5 Due to dynamometer performance limitation mentioned
6 earlier, the maximum acceleration is only 3.3 miles per hour
7 per second.
8 As the vehicle is driven through the speeds and
9 accelerations of this trace, exhaust emissions are collected
10 in bags and analyzed.
11 After the test is completed, the measured exhaust
12 emissions are compared to the applicable emissions standard.
13 To determine the representativeness of the FTP to
14 end use driving behavior, a series of driving surveys were
15 conducted in 1992.
16 The studies conducted by the US EPA and the motor
17 vehicle industry were in Spokane, Washington, Baltimore,
18 Maryland and Atlanta, Georgia. The studies conducted by the
19 ARB were in the Los Angeles greater metropolitan area.
20 Over 100 of the most commonly performed trips in
21 the Los Angeles basin were used to generate the data, with a
22 total of almost 800 miles recorded.
23 This chart compares the FTP speed and acceleration
24 parameters with those found from the 1992 driving survey
25 collected in Los Angeles. As expected, the average speed,
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1 maximum speed and the maximum acceleration found in end use
2 driving far exceeded those found on the FTP.
3 Using the data from all four cities, the US EPA
4 determined that the FTP only represented 72 percent of end
5 use driving.
6 This means that remaining 28 percent of end use
7 driving results in excessive hydrocarbon, carbon monoxide and
8 oxide nitrogen exhaust emissions since they are essentially
9 uncontrolled by the current certification test procedure.
10 Another aspect of the FTP that was scrutinized was
11 the representation of air conditioner usage. Several test
12 programs were conducted by the automotive manufacturers and
13 the US EPA and the ARB.
14 In a manufacturer test program that was conducted
15 in a full environmental chamber to simulate the ambient
16 conditions of a hot summer day, exhaust emissions with the
17 air conditioner turned on were significantly higher than with
18 the air conditioner turned off.
19 Most significant were oxide and nitrogen emissions,
20 which almost doubled with the air conditioner turned on when
21 driven over the FTP.
22 It was clear that FTP did not accurately reflect
23 the end use driving conditions. After several years of
24 cooperative effort with the ARB and the motor vehicle
25 industry, the US EPA promulgated a final rule on October 22,
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1 1996.
2 The final rule adopted the supplemental Federal
3 test procedure, or SFTP for short, consisting of two new
4 tests, an aggressive driving test and an air conditioner
5 simulation test.
6 These tests would be required for certification in
7 addition to the FTP. Useful life emission standards were
8 adopted only for Federal vehicles, certified to the Tier One
9 FTP exhaust emission standards.
10 Tier One vehicles are those that are required to
11 meet FTP emission requirements significantly less stringent
12 than California's low emission vehicles.
13 In addition, the standards were formulated to allow
14 a composite of the emissions from aggressive driving tests,
15 the air conditioner tests and the FTP.
16 Also adopted as part of the FTP final rule were
17 approved dynamometer requirements. From 1995 to 1997, ARB
18 staff and the motor vehicle manufacturers conducted extensive
19 test programs to develop SFTP emission standards for
20 California's low-emission vehicles and ultra low-emission
21 vehicles.
22 Compared to the Federal Tier 1 vehicle standards,
23 more stringent SFTP standards are appropriated for
24 low-emission vehicles, since they are equipped with more
25 advanced emission control systems and therefore emit
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1 significantly less emissions.
2 For example, at 50,000 miles, passenger cars
3 certified to a low emission vehicle category are permitted to
4 emit only 30 percent of hydrocarbon emissions and 50 percent
5 of oxide nitrogen emissions compared to Tier 1 vehicles.
6 Since production gasoline fuel low-emission
7 vehicles were not available at that time, manufacturers
8 supported the regulatory effort by providing test data on
9 over 20 prototype low-emission vehicles.
10 ARB staff also tested over 40 production passenger
11 cars and light-duty trucks and medium-duty vehicles certified
12 to the Tier 1 or transitional low-emission vehicle FTP
13 emission standards.
14 The data generated in the test programs were
15 ultimately used to develop the proposed emission standards.
16 As the results of this successful cooperative
17 effort on the part of staff, US EPA and the motor vehicle
18 manufacturers, staff's proposal reflects an agreement on most
19 of the major issues.
20 The first element of staff's proposal is the
21 adoption of identical supplemental Federal test procedures as
22 in the Federal program.
23 As discussed earlier, the SFTP consists of two
24 tests. The first test characterizes high speed and high
25 acceleration driving.
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1 The US06 test is 10 minutes long and contains some
2 fairly severe driving events, such as accelerating on a
3 freeway onramp, high speeds and high-speed passing
4 maneuvers.
5 The maximum speed is 80 miles per hour. The
6 maximum acceleration is 8.5 miles per hour per second. The
7 test is conducted as a hot stabilized test where the vehicle
8 is operated in a warmed-up condition, with critical emission
9 control components, such as the catalytic and the oxygen
10 sensor, at typical operating temperatures.
11 To compare the US06 to the LA4 cycle, it is easiest
12 to look at speed versus acceleration charts of the two
13 cycles.
14 The speed versus acceleration points of the LA4
15 cycle are shown in green, mostly clustering in a ball around
16 the lower speeds in acceleration.
17 The points of US06 shown in yellow essentially
18 surround those of the LA4 because of the higher speeds and
19 accelerations.
20 Together, these driving schedules capture virtually
21 all driving modes. The second test consists of the air
22 conditioners simulation tests.
23 The test is conducted as a hot start test where the
24 vehicle is started, warmed up with critical emission control
25 components in typical operating conditions.
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1 The test would be conducted in an environmental
2 chamber with the air conditioner turned on. Since the air
3 conditioner load on the engine is affected by ambient
4 conditions, the environmental chamber assures an accurate
5 representation of real world air conditioner usage by
6 simulating the ambient conditions of a hot summer day.
7 The ambient specifications of the facility include
8 high ambient temperatures, humidity, solar load and wind
9 effects.
10 As an alternative, an air conditioner simulation in
11 a standard test cell can be used if it is demonstrated to
12 correlate with the emission chamber testing.
13 During the air conditioner simulation test, the
14 vehicle is driven over the SC03 driving schedule. This is a
15 new driving schedule designed by the US EPA that consists
16 primarily of low to moderate type driving, similar to the
17 LA4.
18 The second element to staff's proposal is SFTP
19 emission standards applicable to the low-emission vehicles
20 and ultra low-emission vehicles and super ultra low-emission
21 vehicles.
22 The proposed standards are significantly more
23 stringent than the Federal SFTP standards and were developed
24 based on emission data from the ARB and industry test
25 programs.
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1 The proposed standards for passenger cars,
2 light-duty trucks, medium-duty vehicles up to 8,501 pounds,
3 gross vehicle rate weightings are shown in the chart, these
4 proposed standards would apply at 4,000 miles of use without
5 a useful life element.
6 Assurance of SFTP emission durability beyond 4,000
7 miles would be indirectly provided by the existence of useful
8 life FTP emission standards.
9 In addition, use of on-board diagnostics to monitor
10 in-use FTP emissions and to assure proper operation of
11 emission control components would provide added certainty of
12 appropriate SFTP emission durability.
13 Consistent with the Federal requirements, staff
14 proposes to accept alternative fuel vehicles from the SFTP
15 requirements because of a lack of adjustment factors for the
16 low-ozone reactivity of alternative fuel exhaust emissions.
17 Thus, staff proposes to apply these standards to
18 only gasoline, diesel and hybrid gasoline and diesel electric
19 vehicles.
20 Staff also proposes that the implementation of the
21 new SFTP requirements start in the 2001 model year for
22 passenger cars and light-duty trucks.
23 By the 2004 model year, all passenger cars and
24 light-duty trucks would need to comply with the proposed test
25 and standards.
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1 A later implementation schedule is proposed for
2 medium-duty vehicles, with full compliance by the 2005 model
3 year.
4 The fourth element is new vehicle audit
5 requirements. Staff proposes that the new vehicle audit
6 testing be applied to confirm compliance with the proposed
7 standards beginning in the 2002 model year, which is the
8 second year of the phasing for passenger cars and light-duty
9 trucks.
10 Staff also proposes other related items that
11 pertain to this rulemaking. One such item is the adoption of
12 approved dynamometer requirements, identical to those adopted
13 by the US EPA.
14 These improved dynamometers are needed in order to
15 conduct the SFTP and to more accurately represent on-road
16 vehicle load effects during emission testing.
17 Both the FTP and the SFTP testing would be
18 conducted with improved dynamometer systems. For vehicles
19 certified to the Tier 1, or transitional low-emission vehicle
20 FTP standards, staff proposes identical SFTP emission
21 standards as those adopted by the US EPA for Federal Tier 1
22 vehicles.
23 Staff is also proposing restrictions for the use of
24 lean-on-cruise strategies. The use of these strategies
25 during extended high speed cruise conditions has shown to
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1 result in oxides of nitrogen emission increases as high as
2 six grams per mile.
3 Because the proposed aggressive driving US06 test
4 contains only a limited amount of high speed cruise
5 conditions, staff is including regulatory language to
6 restrict the use of lean-on-cruise driving unless it is shown
7 not to result in an emissions increase.
8 From the ARB test programs, the test data shows
9 that roughly 70 percent of the test vehicles could comply
10 with the proposed standards with sufficient compliance margin
11 using only software modifications.
12 One particular software modification used in the
13 ARB test programs, referred to as Rich Byus Calibration,
14 reduced baseline US06 and SC03 non-methane hydrocarbon and
15 oxides of nitrogen emissions by over 60 percent.
16 For remaining 30 percent of the vehicles, staff
17 estimates that catalyst hardware modifications would be
18 needed, with 15 percent using increased catalyst precious
19 metal loading and the remaining 15 percent requiring an
20 increase in catalyst volume.
21 Staff estimates that the proposed standards and
22 tests would result in air quality benefits of 133 tons per
23 day statewide of reactive organic gases and oxide of nitrogen
24 emission in 2020.
25 The disbenefits of reactive organic gases may occur
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1 as a result of allowing a combined non-methane hydrocarbon
2 and oxides of nitrogens standard.
3 This is due to a trade-off that generally occurs
4 with the Rich Byus Calculation, small hydrocarbon emission
5 increases for large oxides of nitrogen emission reductions.
6 However, manufacturers may use improved calibration
7 techniques in which hydrocarbon increases will not occur. As
8 a worst case scenario, staff estimates that small hydrocarbon
9 emission increases would result.
10 Little carbon monoxide emission benefits are also
11 expected and, therefore, are not shown on the table. The air
12 quality impacts of aggressive driving and air conditioner
13 operation were not included in the 1994 State Implementation
14 Plan.
15 Thus, the projected emission reduction associated
16 with implementation of the proposed tests and standards do
17 not directly affect the State Implementation Plan.
18 Staff's estimate of the projected cost to comply
19 with the proposed amendment is $43.2 to $57.9 million, or
20 $28.8 or $38.6 per vehicle.
21 The estimated cost effect is 44 to 60 cents per
22 pound reduced, which compares favorably to typical cost
23 effectiveness values for current air pollution control
24 measures.
25 During the past several years of cooperative effort
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1 with the US EPA and the motor vehicle industry, staff has
2 worked with both parties to resolve many outstanding issues.
3 Despite the success of this effort, a few issues still
4 remain.
5 First, manufacturers requested that staff consider
6 combining or compositing the US06 and air conditioner
7 standards.
8 Staff is currently proposing stand-alone SFTP
9 emission standards in which the US06 and SC03 standards would
10 need to be met separately.
11 While composite standards added flexibility when
12 compared to stand-alone standards, there would likely be an
13 air quality disbenefit. Whereas manufacturers typically use
14 an appropriate compliance margin on each test with
15 stand-alone standards, the composite approach would likely
16 reduce the compliance margin needed when the tests are
17 weighed together.
18 Thus, emission levels higher than those expected to
19 comply with the stand-alone standards would likely result
20 under the composite approach.
21 Manufacturers also requested that staff consider
22 4,000 mile standards without a useful life element for Tier 1
23 and transitional low-emission vehicles, similar to the
24 proposed standards for low-emission vehicles.
25 Currently staff is proposing the adoption of SFTP
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1 standards consistent with 50,000 and 100,000 mile standards
2 adopted by the US EPA for these vehicles.
3 Because the US EPA standards were technically based
4 and have already been finalized as useful life standards,
5 staff proposes to maintain these standards.
6 Thirdly, manufacturers commented that diesel fuel
7 low-emission vehicles would have difficulty complying with
8 the proposed SFTP standards and should be exempted from the
9 requirements as in the low-emission vehicle program.
10 Staff is proposing the same standards for gasoline
11 and diesel fuel vehicles. Advanced technology diesel fuel
12 vehicles currently available just comply with the Tier 1
13 emission standards, and no diesel fuel vehicles are certified
14 to the low-emission vehicle FTP standards.
15 For consistency with the low-emission vehicle
16 program, staff proposes to continue applying the same
17 standards to gasoline and diesel fuel vehicles.
18 Staff is also recommending minor modifications
19 today to the SFTP proposal. The first is revisions to the
20 proposed lean-on-cruise language.
21 In response to industry's comments, staff has
22 worked closely with industry during the last two months to
23 revise the proposed lean-on-cruise language.
24 The second change is related to a request by
25 industry that they be allowed to comply with an alternative
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1 phase-in schedule.
2 To accommodate this request, staff proposes
3 modified language to submit alternative phase-in schedule
4 prior to certification.
5 In addition, minor changes to clarify staff's
6 proposal are included.
7 In conclusion, staff recommends that the Board
8 adopt the proposed SFTP tests and standards to control
9 exhaust emission for motor vehicles during aggressive driving
10 and air conditioner usage as outlined in Resolution 97-32.
11 Thank you. Staff can address any questions you may
12 have.
13 CHAIRMAN DUNLAP: Mr. Kenny, anything that you want
14 to add or subtract?
15 MR. KENNY: No.
16 CHAIRMAN DUNLAP: Okay. All right.
17 Mr. Ombudsman, Mr. Schoning, do you have any
18 comments regarding the process prior to today that you care
19 to address about how this item came to the Board?
20 MR. SCHONING: Yes, I do, Mr. Chairman.
21 Good morning, Committee Members.
22 The proposal presented here for your consideration
23 has been developed, as they indicated, over a five-year
24 period of cooperative effort, beginning in 1992 and
25 concluding today, for the motor vehicle industry and the US
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1 EPA.
2 To develop today's proposal, staff conducted over
3 50 teleconferences and 13 in-person meetings with the
4 regulated parties.
5 Each meeting was well attended with representation
6 for General Motors, Chrysler, Honda, Toyota, Nissan, Mazda,
7 Mercedes-Benz, Volkswagen and smaller volume manufacturers,
8 such as Lamborghini.
9 The issues discussed included development of the
10 test procedures, the designs of the test program, discussion
11 and analysis of the data from the test program and how best
12 to draw conclusions or findings using the test program data.
13 The draft proposal on April 3, 1997, with staff's
14 proposed tests and emissions standards, was sent to more than
15 600 interested and affected parties, including the Natural
16 Resources Defense Council, and it was made available over the
17 Internet.
18 Board hearing notices were sent to the
19 aforementioned parties and almost 1600 additional interested
20 parties on the ARB mailing list.
21 In conclusion, we believe that staff worked
22 diligently with all affected and interested parties during
23 the regulatory outreach efforts.
24 CHAIRMAN DUNLAP: Very good. Thank you, Mr.
25 Schoning.
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1 Any questions of staff at this juncture?
2 We have four witnesses that have signed up to
3 provide comments to us.
4 I asked Mr. Calhoun if he had any questions at the
5 outset, and he said, no. He's our automotive expert, and I
6 would encourage us all to hold off until we get into the
7 hearing for the witnesses.
8 If I could have the four witnesses come to the
9 front few seats up there. We will start off with Glen
10 Heiser, the American Automobile Manufacturers Association,
11 and Greg Dana, the Association of International Automobile
12 Manufacturers Association.
13 Both of you are in the same line as the first
14 speaker. So, I guess you are going to tag team, so please
15 come forward. You can do that.
16 The final two speakers are Frank Bohanan, from
17 SEMA, and David Millerick, from Ford.
18 Good morning.
19 MR. HEISER: Good morning, Mr. Chairman and Members
20 of the Board.
21 My name is Glen Heiser, and I am with the Vehicle
22 Environmental Engineering Staff, of Ford Motor Company. I am
23 also the Chairman of the American Automobile Manufacturers
24 Association of International Automobile Manufacturers
25 Supplemental Test Procedure Ad Hoc Panel.
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1 With me today is Gregory Dana, Vice President,
2 Technical Director for AIAM. AAMA and AIAM appreciate the
3 opportunity to comment on the California Air Resource Board's
4 proposal to adopt SFTP and the associated emission standards
5 as detailed in mail-out 9713.
6 The development of the procedures and standards was
7 initiated with the 1990 Federal Clean Air Act Amendments. We
8 would like to commend CARB for the significant progress made
9 in this rulemaking process.
10 For us, during the last six years a significant
11 cooperative effort was made by CARB, the US EPA and the AAMA
12 and the AIAM member companies in an effort to provide this
13 rulemaking with a sound technical basis.
14 It was through this cooperative technical exchange
15 that all involved were able to recognize areas of in-use
16 operation that warranted additional study, including the high
17 speeds, high accelerations and air conditioning operation.
18 Further benefits made possible through this
19 cooperative effort include the commonization of test
20 procedures with the EPA.
21 While recognizing CARB's effort in developing
22 unique standards, we cannot overstate how important it is to
23 have common test procedures.
24 We commend CARB for supporting the commonization of
25 test procedures with EPA.
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1 MR. DANA: Good morning.
2 As Glen mentioned, my name is Greg Dana, and I am
3 Vice President and Technical Director of the Association of
4 International Automobile Manufacturers.
5 I would like to reemphasize AAMA and AIAM's
6 long-term effort to gather data and information relevant to
7 this SFTP.
8 Our member companies have spent millions of dollars
9 and countless man-hours to ensure any revisions to the SFTP
10 would have a sound technical basis.
11 The results of this cooperative undertaking will
12 provide substantial air quality benefits for California, as
13 well as the rest of the Nation.
14 Also we must reemphasize the challenge these
15 proposed regulations will place on the individual
16 manufacturers.
17 The CARB SFTP proposal is largely supported by the
18 auto manufacturers. However, we continue to have concerns
19 about a few aspects of the proposed regulations.
20 CARB's proposed US06 and SC03 standards are
21 stringent, and compliance with these requirements will
22 require significant changes in vehicle hardware and large
23 resource commitments.
24 In addition, the air conditioning test procedure
25 brings with it the added cost of environmental facilities
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1 construction.
2 CARB's proposed phase-in recognizes the difficulty
3 in meeting all of these requirements, and we appreciate the
4 flexibility that CARB has allowed in meeting the phase-in
5 requirements.
6 Industry recognizes the need for off-cycle
7 emissions control and will commit significant resources to
8 meet the new requirements.
9 Accordingly, the benefits that result from these
10 additional controls should be properly determined to ensure
11 future level source policy decisions are based on accurate
12 information.
13 The following AAMA and AIAM comments address the
14 areas where industry believes the final requirements could be
15 improved with some modification.
16 On diesel and lean-burn, AAMA and AIAM have
17 requested to CARB they postpone this SFTP standards to diesel
18 and lean-burn gasoline engines until a greater understanding
19 of the environmental impact of these technologies is
20 available.
21 Diesel injected and lean-burn engine technology
22 holds promise as a future transportation power train.
23 Lean-burn engine technology includes both gasoline
24 and diesel fuels. Environmental benefits include greater
25 fuel economy, lower hydrocarbons of CO and CO2 emissions,
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1 reduced refueling emissions, lower transportation refining
2 emissions, lower cold start emissions, and in the case of
3 diesel fuel, no evaporative emissions.
4 These attributes should be investigated further
5 before CARB adopts the same LEV, ULEV, SULEV, SFTP standards
6 for diesel and lean-burn vehicles as are adopted for current
7 stoichiometric, three-way catalyst gasoline vehicles.
8 To date, there are no test data available to
9 accurately assess the state of lean-burn concepts and the
10 cost and viability of future technology.
11 CARB has chosen to set an extremely difficult LEV,
12 ULEV, SULEV standard for lean-burn engines, with no known
13 technique available to meet these standards.
14 This will be a deterrent to future lean-burn
15 development. AAMA and AIAM suggest that CARB implement a
16 cooperative test program between Government and industry to
17 evaluate diesel lean-burn technologies before standards for
18 this type of vehicle are established.
19 Through the six-year rulemaking process, the
20 proposed SFTP standards have evolved into a rule that
21 primarily addresses NOx emissions from gasoline vehicles
22 employing stoichiometric, three-way catalyst emission control
23 techniques.
24 Lean-burn inherently has poor NOx emissions,
25 compared to stoichiometric vehicles, but due to the many
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1 positive attributes of lean-burn concepts listed previously,
2 the auto industry continues to work diligently on lean-burn
3 NOx catalyst and lean-burn NOx control strategies.
4 The proposal LEV, ULEV, SULEV and SFTP standards
5 represent a severe reduction in NOx levels for lean-burn
6 concepts that would tend to discourage further developments
7 in this promising field.
8 AAMA and AIAM recommend that CARB postpone
9 establishing standards for lean-burn concepts, or consider a
10 phase-in of NOx controls over a longer period of time.
11 An interim step for lean-burn vehicles at the LEV
12 level may be a viable way to accomplish this.
13 I would like to discuss some of the advantages of
14 diesel and lean-burn technologies. CARB has not studied
15 in-use driving patterns from diesel powered passenger cars
16 and trucks.
17 Due to lower cold start emissions, no evaporative
18 emissions and no refueling emissions scenarios exist where
19 diesel vehicles could offer positive environmental benefits.
20 One example would be a vehicle driven to and from
21 work for a short distance in hot ambient conditions,
22 therefore experiencing two cold starts and long periods of
23 hot soaks.
24 Diesel engine emissions are extremely stable over
25 time and have better emission deterioration factors.
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1 Compared to gasoline vehicles, the deterioration is
2 essentially zero.
3 In addition, diesel vehicles require no evaporative
4 emission controls and have no end-use issues with evaporative
5 emissions or ORVR controls.
6 Diesel and lean-burn engine concepts can offer up
7 to a 30 percent increase in fuel economy resulting in fewer
8 refueling events and fewer refueling emissions.
9 Diesel engines have the additional advantage of
10 having extremely low refueling emissions. The outstanding
11 fuel economy, that is lower carbon dioxide emissions of
12 lean-burn engine designs translates to lower fuel
13 transportation and refining emissions due to the simple fact
14 that less fuel is consumed.
15 In the case of diesel engines, further emission
16 advantages are realized due to the low vapor pressure of
17 diesel fuel during transportation and handling.
18 In addition, refining diesel fuel is an inherently
19 simpler process that requires less energy and results in
20 fewer refinery requirements.
21 On single-roll electric dynamometer requirements,
22 we noted an inconsistency in the staff's proposal. We think
23 at this point that has been ironed out.
24 It is our understanding from discussing this with
25 staff there is no intent to tie the new single-roll
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1 dynamometers back to the two-roll dynamometers because of the
2 superior ability of the single-roll dynamometer.
3 We agree with that idea. We are concerned that the
4 language that is in the proposal is a bit convoluted, and it
5 might require some clarification to make it very clear that
6 there is no tie to those two dynamometer types.
7 For lean-on-cruise calibration, CARB's proposal
8 includes a section which specifically addresses
9 lean-on-cruise calibration strategies.
10 The most recent draft of this section provided to
11 AAMA and AIAM prevents the use of such strategies, unless
12 they are substantially employed during the FTP or SFTP, they
13 are demonstrated not to significantly reduce non-methane
14 hydrocarbon plus NOx emission controls effectiveness, while
15 they are necessary to protect the vehicle occupants, engine
16 or emission control hardware. This draft section is not
17 intended to apply to lean-burn engines or diesel cycle
18 engines.
19 AAMA and AIAM do not support the addition of a
20 lean-on-cruise section. We believe the material covered in
21 this section is already addressed sufficiently in CARB's
22 existing regulations which prohibit defeat devices.
23 To the extent that the new section is intended to
24 single out lean-on-cruise calibration strategies for special
25 treatment under CARB's defeat device criteria, AAMA and AIAM
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1 believe that it is inappropriate.
2 No showing has been made that the existing
3 regulations are inadequate to address any problems that may
4 be presented by lean-on-cruise calibrations.
5 Therefore, AAMA and AIMA recommend that CARB not
6 adopt any new regulatory language specific to lean-on-cruise
7 calibration strategies.
8 If CARB feels compelled to provide additional
9 guidance relative to lean-on-cruise, such guidance could be
10 provided to manufacturers in a letter and should incorporate
11 the language recently discussed by industry representatives
12 and CARB staff.
13 CARB's draft regulatory text specifies stand-alone
14 US06 and SC03 standards for all vehicles. AAMA and AIAM
15 continue to request that CARB adopt composite non-methane
16 hydrocarbon plus NOx standards, listed in Table 1 in the
17 testimony, to add flexibility while maintaining air quality
18 benefits.
19 The recommended standards were also provided in the
20 April 17, 1997, AAMA/AIAM letter to Mr. Robert Cross, and the
21 AAMA and AIAM comments on mail-out 9706 to Mr. Robert Cross,
22 dated May 6, 1997.
23 While allowing manufacturers added flexibility, the
24 recommended composite standards would not reduce the benefits
25 of the program.
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1 The weighting factors used to determine the
2 composite standards are the same factors used by CARB staff
3 in the course of SFTP discussions.
4 These weighting factors will ensure that the
5 tradeoffs between US06 and SC03 do not overstate the
6 benefits.
7 EPA has already recognized the usefulness of this
8 concept by adopting SFTP standards based on a composite of
9 FTP, US06 and SC03.
10 CARB's draft regulatory text specifies 50K and full
11 useful life standards for Tier 1 and TLEV vehicles, while
12 proposing 4K for LEV, ULEV and SULEV vehicles.
13 AAMA and AIAM continue to request that CARB adopt
14 the 4K Tier 1 TLEV SFTP standards listed in Table 1.
15 These standards were also provided in the April 17
16 letter to Robert Cross and the AAMA and AIAM comments on
17 mail-out 9706.
18 Tier 1 TLEV 4K standards are recommended in order
19 to align the SFTP process in California. This will eliminate
20 the current discontinuity between Tier 1 TLEV and LEV, ULEV
21 and SULEV certification requirements.
22 The manufacturers believe that the consistency
23 within the California LEV program should be maintained.
24 These differences unnecessarily complicate the
25 development process with no corresponding benefit to air
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1 quality.
2 Additionally, the recommended standards also
3 reflect its unique SC03 and US06 weight class relationships
4 developed by CARB staff.
5 As with LEV vehicles, in-use performance will be
6 ensured by the underlying FTP requirements and OBD-2
7 systems.
8 MR. HEISER: Regarding the SFTP benefits analysis,
9 AAMA and AIAM are concerned that the benefits estimated by
10 CARB for SFTP control are understated, particularly for
11 non-methane hydrocarbons and carbon monoxide.
12 While there are questions with the methodology used
13 by CARB to determine the benefits, for example, the
14 representativeness of the vehicle sample used, our comments
15 today center on CARB's use of air fuel, Rich Byus, to
16 determine the benefits.
17 We believe CARB's Rich Byus approach skews the
18 benefit estimates and are not consistent with assumptions
19 made for other elements of the rule.
20 We would like to take this opportunity to discuss
21 three specific concerns with CARB's Rich Byus methodology.
22 First, CARB's assumption that Rich Byus will be the
23 only control strategy overstates HC and CO disbenefits.
24 AAMA and AIAM are concerned that CARB's benefits
25 analysis over emphasizes the HC and CO increases which result
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1 from Rich Byus, while masking or excluding benefits which
2 results from the use of other likely emission control
3 measures, such as stoichiometric calibration and hardware
4 modifications.
5 It has long been the position of AAMA and AIMA that
6 vehicle hardware modifications will be required to comply
7 with the SFTP standards.
8 This is even acknowledged in CARB's cost analysis,
9 which estimates that 30 percent of vehicles will require
10 hardware modifications, although this estimate is likely
11 understated.
12 CARB's benefit analysis, however, assumes that no
13 vehicles will require hardware modifications to comply with
14 the requirement.
15 This inconsistency is of particular concern since
16 hardware modifications, such as catalyst improvements, will
17 improve emissions for all three constituents over all
18 warmed-up driving, not just US06.
19 Based on the Rich Byus test results, CARB estimated
20 an HC disbenefit of 5.3 tons per day and no CO benefit on a
21 statewide basis in 2010.
22 By comparison, EPA estimated an HC benefit of 158
23 TPD on the Federal level in 2010. Although a direct
24 comparison between the EPA and CARB TPD estimates is not
25 appropriate because of the difference in associated standard
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1 levels, the comparison does highlight the fact that CARB's
2 estimates are not directionally consistent with EPA's.
3 We believe this results from CARB's over reliance
4 on Rich Byus in the benefit calculation.
5 Our second concern is that CARB's Rich Byus
6 methodology used in their benefits analysis is not consistent
7 with CARB's selective Byus-ing argument used in setting the
8 US06 standards.
9 In justifying the use of Rich Byus for US06
10 control, CARB contends that hydrocarbon and CO increases over
11 FTP-like driving could be avoided by selectively calibrating
12 such that Rich Byus strategies would only be used over
13 US06-type driving. This is referred to by CARB as selective
14 Byus-ing.
15 This same argument, however, is not applied to
16 CARB's benefit calculation. Instead, HC and CO increases
17 over the entire unified cycle are applied to the inventory
18 estimates, without any distinction between FTP and US06-like
19 driving.
20 We believe that the calculations could be
21 improved.
22 Our third concern relates to CARB adjusting NOx
23 levels upward in the calculation of A/C benefits, but they
24 could not adjust A/C levels downward accordingly, and we do
25 believe they could recalculate and improve those benefits by
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1 including the appropriate adjustment.
2 In general, we believe that benefits should be
3 determined based on the difference between in-use emissions
4 from pre-SFTP vehicles and the in-use emissions which would
5 result from vehicles designed to meet the SFTP standards with
6 adequate headroom.
7 EPA's benefit analysis included this approach,
8 resulting in HC and CO benefit levels directionally opposite
9 of CARB's.
10 This approach does not presume only one control
11 measure indicated by Rich Byus, does not carry with it the
12 inaccurate HC and CO penalties.
13 As previously stated, we recognize the need to
14 control all cycle emissions, and we will commit major
15 resources to meeting those requirements.
16 The benefits from this effort need to be properly
17 calendared so that future Mobile Source policy is based on
18 the most accurate information possible.
19 While we do not want our concerns to delay the
20 adoption of this rule, we urge CARB to revise their benefit
21 estimates to more accurately reflect the control technologies
22 which will be required to meet these standards.
23 In conclusion, we appreciate CARB's effort to
24 promulgate rules which are technically sound, cost effective
25 and appropriate.
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1 We believe that the additional modifications set
2 forth in our comments, we addressed the few remaining
3 problems with the proposal, will result in an improved
4 rulemaking package.
5 We urge CARB to adopt these modifications. Thank
6 you for the opportunity to present, and we will take any
7 questions that you might have.
8 CHAIRMAN DUNLAP: Thank you.
9 I appreciate the time and effort to bring the
10 comments together, and I know that takes a lot of work and a
11 lot of effort, and I appreciate that.
12 What I think we need to do, and I'm looking at
13 staff here, is to address -- I'm not looking at a point by
14 point counter point debate, but I would like to have some
15 reaction.
16 If I may attempt to theme your comments, it would
17 be that it appears, I am speaking to Tom, that we may have
18 overreached, we may have gone directionally, perhaps,
19 differently than the signals that we have sent in the past
20 and what US EPA has done and is doing.
21 While the industry is supportive, and that is good,
22 I appreciate hearing that, they are worried about some of the
23 details and where that takes them.
24 Also, we might have overly prescribed some things
25 that they are willing to deal with and made commitments, and
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1 they feel we have the ability to hold them accountable. We
2 are being overly descriptive with some of the language.
3 So, what I think that what I would like you to do
4 is, does staff have their comments?
5 Tom, why don't you broker the discussion. Let's go
6 through it fairly quickly. I don't want a big discussion.
7 If you gentlemen wouldn't mind staying close to the
8 mike. I don't want to get into a debate, but I want to
9 understand where the areas of concern are.
10 MR. CACKETTE: The first one under specific issues
11 is the diesel and the lean-burn issues.
12 In the light-duty area, the Board has been fuel
13 neutral, has established emission standards which are
14 independent of the type of fuel burned in the vehicle.
15 The proposed standards that are in front of you
16 today continues that. The concern here is that diesels are
17 making, diesel type engines are making a reemergence into the
18 marketplace, places like Italy, they're 45 percent of sales.
19 Most European countries at a minimum they're 10
20 percent of sales. Here in the United States they are one
21 percent or less of sales in light-duty and car area.
22 I think that there is a trend here towards this
23 type of technology entering the United States marketplace.
24 What is being asked is that we delay and think a
25 little bit more about what these new cleaner diesels look
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1 like and whether or not they can meet these emission
2 standards.
3 Staff's view and point is that the emission
4 standards need to be met one way or another. If technology
5 can't meet the emission standards, then we have alternate
6 technologies which can, which are the gasoline cars that we
7 drive today.
8 I would also note that there is a major effort
9 between the National Administration and Ford, Chrysler and
10 GM, called the Partnership for a New Generation of Vehicles,
11 which is a billion dollar, multi-year effort to come up with
12 an 80 mile per gallon mid-size car prototype by 2,004, and a
13 bunch of technologies are being considered, but the clear
14 leading technology right now is in diesel hybrid electric
15 vehicle, and the word diesel there has raised a large amount
16 of concern amongst the environmental community.
17 There was a symposium that I attended yesterday in
18 Washington on this technology, and on the second day of that
19 symposium, the Vice President of the United States got up and
20 gave an address, and in that address he used the words that,
21 yes, we are considering diesels. They have many great
22 advantages, but in terms of emissions standards for urban
23 smog, there will be no exceptions. There will be no
24 exceptions.
25 So, it is at least the National Administration's
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1 position also that diesel is going to be a part of our
2 vehicle mix in the light-duty sector, and it has to meet the
3 same kind of standards that the gasoline car does.
4 We feel very comfortable and strongly recommend
5 that we apply these standards to all different types of
6 technologies, and if any glitches come up later on in this
7 area, we can deal with them then, but not set the principle
8 that we should leave it open for lack of standards for other
9 technologies.
10 In terms of the composite standards, I think that
11 we addressed that in the staff report. If you take the air
12 conditioning test and the aggressive driving test and let
13 them be averaged together, then that result is a lack of
14 standard because of the increased flexibility and that would
15 result in a loss of emission control, and we don't think that
16 should be done in this case. There is not a need for it.
17 The comment C, which is lean-on-cruise calibration
18 strategies, a bit of background as to why we have that in
19 there.
20 This is dealing with quote, off-cycle driving,
21 which is what the purpose of the regulation was. Somewhat
22 late in the process, we, in cooperation with EPA, identified
23 that at least one truck line, and perhaps now more vehicles,
24 have been calibrated so that they go lean-on-cruise, and when
25 they go lean-on-cruise, at least based on this one truck
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1 engine family, the NOx emissions went up by a factor of 10.
2 That is arguable about whether that was allowed or
3 not under our regulations, and I think that is being worked
4 out and in the process of enforcement.
5 But we thought this was the right time to simply
6 indicate that having a complete lack of emission control
7 during a cruise condition which may be outside of the FTP or
8 supplemental proposal that we are talking about today is
9 simply unacceptable because of large emission increases, so
10 we just put this provision in here a couple of months ago and
11 thought it would compliment the overall proposal.
12 CHAIRMAN DUNLAP: For what it is worth, gentlemen,
13 that illustrative point convinces me not to go your way on
14 the lean-on-cruise issue.
15 Okay. We cannot have a ten-fold increase in
16 emissions as a result of somebody's favorable interpretation
17 for their interests.
18 Mr. Calhoun, on that point.
19 MR. CALHOUN: I would like to ask or make one
20 comment regarding something that Mr. Cackette said.
21 The policy of the Board has to be fuel neutral. I
22 will make an exception today.
23 I want to make sure that we acknowledge that,
24 because down the road we may want to do something about that
25 in terms of alternative fuels.
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1 We are not subjecting them to this particular
2 regulation. Someone may view that as being that we are
3 biased, that we are being somewhat biased.
4 Maybe down the road we may want to include them in
5 this particular regulation. I guess one of the things that I
6 think about as we go about looking at these regulations, it
7 looks to me as though we are almost telling the manufacturers
8 how to design their vehicles, which is something that we have
9 tried to avoid, in the future, or in the past.
10 But I don't think there is any question but that
11 there is a need to do something about the emissions that
12 occur outside of the driving cycle.
13 I don't think that is -- let me say that is
14 basically what we are doing. Historically when the regs were
15 first adopted, the current Federal test procedure, it was
16 based on data in Los Angeles in the late 60's and early
17 70's.
18 The first CVS procedure was based on the maximum
19 speed of 57 miles an hour. If you drive 57 miles per hour in
20 Los Angeles, they would run over you.
21 There are a lot of other things, but over the years
22 things have changed. They changed the procedure again in
23 1975 and made a couple of other changes.
24 So what is before the Board today is a proposal by
25 the staff to make some more changes. We learn as we move
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1 ahead.
2 We have to make changes. I guess the real question
3 I would have as far as the industry is concerned, are there
4 really problems, major problems associated with these
5 proposed regulations, and if so, I would like you to identify
6 them.
7 I admit that there are nuances here that should be
8 considered. But are there any major problems?
9 MR. DANA: Well, we tried to explain that we are
10 generally in agreement with everything that has gone on so
11 far, and we laid out some of the things that we see as issues
12 that still remain.
13 I think that based on Tom's discussion, the
14 statement that we have gasoline because we don't need diesel
15 is kind of a major issue at least for those that sell diesel
16 vehicles.
17 It certainly seems a little cavalier of CARB to
18 decide you are just going to eliminate a technology,
19 especially when it has pretty substantial benefits.
20 We are not asking just to walk away from it, but we
21 are suggesting a test program to look at diesels and see what
22 they are capable of doing.
23 If they are capable of doing something pretty close
24 to this, then let's set that standard, and same with
25 lean-burn. Right now I have manufacturers in my substation
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1 selling lean-burn vehicles in Japan which have a 30 percent
2 benefit of fuel economy which should be important and concern
3 everybody, and they are not brought here because of NOx
4 standards just generally.
5 Everyone is working hard on technology both for
6 lean-burn and diesel to better control NOx. We aren't there
7 yet, but we don't want to just shut the door on potential
8 beneficial technology, when there may be a way to keep them
9 meeting standards that are reasonable for that technology.
10 MR. CALHOUN: I guess that I would agree with
11 that.
12 I don't think that we ought to just arbitrarily say
13 that we are going to eliminate certain technologies because
14 the standards are based on what is technically available.
15 I have to admit that when we have adopted the
16 standards in the past, we have gotten progress reports from
17 the manufacturers, and if there were a need to make some
18 adjustment, we made them, and we kept making progress.
19 MR. CROSS: One of the things that drives the staff
20 bonkers in this area is that in briefing many of you Board
21 Members, as you came on line, we showed a table or a chart
22 which showed in rank order, if you will, which vehicle
23 categories contributed the most to the HC and NOx emissions
24 problems in California.
25 If you recall, you may not, but for hydrocarbons,
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1 the problem vehicles were primarily gasoline powered
2 vehicles.
3 For NOx, overwhelmingly, it might come to the tune
4 of hundreds of tons in the South Coast Air Basin, the problem
5 was diesel vehicles.
6 The reason is because diesel vehicles historically
7 have been, these are heavy-duty diesels primarily, trucks,
8 have historically been given an extra allowance, if you will,
9 because of their fuel economy benefit.
10 So what has happened basically is that the NOx
11 problem has shifted from a passenger car problem to a diesel
12 engine problem in the South Coast Air Basin.
13 So, our concern is that we have already got this
14 problem with heavy-duty diesels, and we think it is an unwise
15 thing to recommend to the Board that we open the door to have
16 this problem with the light-duty vehicles as well when we are
17 really trying to push to fix the problem in the heavy-duty
18 area, and if we succeed in the heavy-duty area, then this
19 technology would move forward in light as well.
20 MR. CACKETTE: I would like to comment on that.
21 I did not mean to be cavalier in terms that we
22 don't need diesel cars and that we should automatically
23 exclude them.
24 Clearly I think that the Board has set the
25 precedent that where there is a desirable need for a given
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1 technology, we match the best emission standards that we can
2 to that technology.
3 Diesel trucks is the example. If we wanted to set
4 the tightest emission standards possible for a truck, it
5 would be based on the gasoline engine. That would be way
6 more stringent.
7 But in fact, we have standards that were targeted
8 to the diesel technology, because we know that is the most
9 efficient way to move its goods about.
10 In this case, however, I tend to agree with what
11 Greg said, but I would just flip the card upside down rather
12 than not having diesels included in the standard, it is far
13 better to establish the standard we want the diesel to meet,
14 and then if for some reason it can't meet it, but these other
15 positive attributes need to be weighed in consideration, that
16 is something that we want to bring back to the Board and let
17 them weigh that, those choices.
18 If we exclude them, then the implication is that
19 there is not a target that needs to be met, and it is much
20 better to have the target out there.
21 In this whole Partnership for a New Generation of
22 Vehicle, there is a massive shift of effort going into trying
23 to identify after-treatment and other ways of making these
24 diesel vehicles be as clean as gasoline cars.
25 The standards are what drives that, so this is why
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1 we should apply them to diesels now and reconsider later if
2 that should be necessary.
3 CHAIRMAN DUNLAP: Okay. Any summary comments?
4 MR. CACKETTE: Just one more comment.
5 I just wanted to point out that you just heard
6 testimony that says that the ARB underestimated the emission
7 benefits, and you did not hear testimony that we overstated
8 the costs.
9 That should go down on record here.
10 CHAIRMAN DUNLAP: A historical moment.
11 Yes, Ms. Edgerton.
12 We have two more witnesses, I might add, and I
13 would like to get to the witnesses.
14 I am sure they have some things to add as well.
15 MS. EDGERTON: Yes.
16 I have so many papers that I can't find the
17 button.
18 I wanted to specifically thank Tom Cackette for
19 clarifying that our proposed regulation does not conflict
20 with the National Leadership position on the Partnership for
21 a New Generation of Vehicles.
22 I have been deeply concerned about this, and I have
23 been deeply concerned that the Air Resources Board continue
24 to support the PNGV, and we appreciate the hard work that you
25 are putting in the partnership and especially the effort to
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1 find a realistic and economical way to reduce carbon dioxide
2 emissions from the transportation sector, in that it was
3 approximately 25 percent of the CO2, that is in the current
4 emissions for the United States, yes, I believe it is the
5 United States figure, which is going toward the expected
6 warming of the climate.
7 By the same token, I was glad to see that it was
8 recognized in the National Leadership, and I believe it is
9 also unwise, I agree with that Leadership, that it would be
10 unwise for us to indirectly, however indirectly, encourage
11 this important PNGV to work on a technology which ultimately
12 would preclude us from solving our air pollution problems in
13 the South Coast.
14 So, I appreciate very much your going into that.
15 I followed a lot of the diesel work, and I keep
16 getting a lot of information about the exciting breakthroughs
17 and a lot of the hopes from the new diesels and the high fuel
18 economy, and I have colleagues in the environmental community
19 who call and tell me, this is really great for CO2, and all I
20 can say to them is, hurrah.
21 It is really great for CO2, but we have to make
22 sure that it is also great for achieving the California Air
23 Standards.
24 Thank you.
25 Oh, on the all fuels issue, just to make the remark
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1 that I specifically asked about the alternative fuels issue,
2 and staff said to me that they are not regulated in this
3 measure or there is no proposal to regulate them, because we
4 don't yet have enough data to figure out what the regulation
5 should look like.
6 However, the fact that they are not regulated here
7 does not mean that they will not be regulated. No conclusion
8 should be drawn from that.
9 The intention is that they will be treated the same
10 way. It is simply that we have not gotten to them yet.
11 That is what I was told. Thank you.
12 CHAIRMAN DUNLAP: Thank you, gentlemen. I bring
13 forward the next two witnesses, Mr. Millerick and
14 Mr. Bohanan.
15 Mr. Millerick, we have just heard from your
16 Association. Do you have anything to add or subtract?
17 If Mr. Bohanan is comfortable, we will just have
18 you piggy-back on what your colleagues said.
19 MR. MILLERICK: Okay. Good morning.
20 My name is David Millerick, Account Manager of
21 Emission Compliance Analysis and Planning, with Ford Motor
22 Company.
23 I would just like to take a brief moment of your
24 time to talk about the process that took place during this
25 rulemaking.
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1 It began in 1990 with the Clean Air Act
2 Amendments. During that time we initiated test programs, a
3 many faceted series of test programs that had to do with the
4 way that vehicles drive, that people drive vehicles here in
5 South Coast and other places in the United States.
6 After that it got to the point where we were trying
7 to determine what the test cycle should look like, and then
8 after that a very large test program to decide what the
9 standard should be.
10 Although this was a cooperative effort, there were
11 conflicts and disagreements that developed among the groups,
12 as one might expect in an effort of this magnitude. These
13 include some issues that were potential show-stoppers because
14 of their wide-reaching consequences.
15 However, under the leadership of Bob Cross and his
16 staff, they developed a lot of innovative ideas that allowed
17 us to get past these problems and more productively achieve
18 the final rule.
19 I would like to commend CARB, EPA and the industry
20 for working together to produce a technically sound rule that
21 will yield significant air quality benefits, not only for
22 California but for the entire country.
23 I would like to thank Bob and his staff for
24 everything that they did. Maybe Bob could introduce his
25 staff sometime just so that we know who we are talking about
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1 here.
2 Thank you very much.
3 CHAIRMAN DUNLAP: We will have him do that before
4 he closes on this item.
5 Mr. Bohanan, it appears that you may be the fly in
6 the ointment on this issue.
7 Is that true?
8 MR. BOHANAN: Well, I guess that I wouldn't say the
9 fly in the ointment so much as we have some issues that
10 haven't really been considered.
11 I'm basically for smaller businesses that don't
12 have the resources of the Big Three and so on.
13 Good morning, everybody. My name is Frank
14 Bohanan. I am the Director of Technical Affairs with the
15 Specialty Equipment Market Association, otherwise known as
16 SEMA.
17 On behalf of our member companies, SEMA is happy to
18 provide the ARB with its comments concerning staff's proposed
19 revisions to the Federal Test Procedure.
20 SEMA is a trade association which represents over
21 3300 corporate members involved in the design and
22 development, manufacturing and marketing and distribution of
23 a broad range of products and services for the specialty
24 vehicle after-market.
25 Since many of these products and services are
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1 emission related, ARB's proposal could have significant
2 impact on both employers and consumers in the State of
3 California, particularly in terms of jobs and higher overhead
4 costs.
5 SEMA has reviewed both the EPA final rule and the
6 proposed ARB regulations and continues that each fails to
7 meet the Clean Air Act Amendment requirements and more
8 accurately represent real world driving conditions.
9 SEMA believes the US06 cycle is based upon the
10 inclusion of extreme data which skewed the average speeds and
11 accelerations to cycle to figures higher than what is
12 generally experienced by most drivers.
13 As an example, speeds up to 95 miles per hour were
14 included in the definition of what is considered common
15 operation.
16 The need to include transient dynamometer load
17 adjustment factors towards the number of vehicles to be able
18 to follow the cycle clearly supports this contention.
19 As an example, several vehicles, primarily
20 underpowered vehicles, and large trucks cannot even run the
21 US06 cycle. The dynamometer literally has to have load
22 removed from it on an interim basis to assist the vehicles,
23 if you will, in being able to follow the cycle.
24 Now, to the extent that assistance will not be
25 available when the vehicle is being driven on the road, I
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1 have trouble understanding how that is representative of real
2 world driving.
3 Furthermore, the facilities and equipment required
4 to run both US06 and SC03 cycles are clearly beyond what is
5 normally utilized by or even available to after-market
6 companies.
7 The lack of available test equipment essentially
8 nullifies the opportunity for our members to demonstrate
9 compliance with applicable emission standards under Vehicle
10 Code Section 27156, as allowed by the Executive Order or EO
11 process.
12 As with OB2 and the availability of service
13 information providing our members with a regulatory means to
14 stay in business is of little value if the methods for doing
15 so is not readily available in a timely fashion or are cost
16 prohibitive.
17 Lastly, as California's low-emission vehicle
18 standards may become applicable on a national level due to
19 EPA's potential implementation of end-lead standards and
20 national low-emission vehicles regulations, the concern SEMA
21 has with ARB's proposal, would be former owners, if they were
22 provided nationwide, in particular the after-market needs to
23 overcome the potential problems imposed by varying climates.
24 Fuels and usage patterns cannot reasonably be
25 expected to be satisfied without access to facilities where
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1 necessary product developing and testing work may be
2 conducted.
3 As noted above, no such facilities are available
4 for the after-market to use. To describe our concerns in
5 detail, I have distributed a copy of our written comments
6 which expand on these issues.
7 SEMA believes provisions to the SFTP are needed to
8 better represent actual driving patterns, and emission
9 benefit can be realized if this is done properly.
10 We do not, however, support the extreme nature of
11 ARB's proposal nor EPA's regulation. SEMA suggests that ARB
12 reconsider the need for such stringency as well as its effect
13 upon businesses, particularly small businesses, and the
14 consumer.
15 Specific alternative provisions such as waivers or
16 engineering evaluations in lieu of testing are needed to
17 address the unique circumstances of after-market companies as
18 has been the case previously with the EO process.
19 SEMA is willing to work with ARB to define such
20 provisions so as to achieve real emission reductions without
21 the penalties described.
22 Basically, it is an issue of facilities more than
23 anything else. A common role and a single role is about a
24 $2-million proposition. That is not something that our guys
25 can afford.
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1 Thank you.
2 CHAIRMAN DUNLAP: Very good. I appreciate that.
3 One thing though, and I know you realize it,
4 perhaps it bears mentioning, what we are trying to do here is
5 to accurately, more accurately reflect, as Mr. Calhoun
6 mentioned, and it is actually going on in the highways and
7 roadways of our State, it has been reflected in our approach
8 as we try to control emissions.
9 While I find it hard to believe that we have 95
10 mile per hour speeds included in this new driving cycle
11 proposal, I must ask the staff if in any way, shape or form
12 we are even considering that.
13 MR. CROSS: The answer is, no.
14 I think that it is in the 80's, 80 is the maximum
15 speed, and the discussion about the loads, basically they had
16 to have one cycle to cover everything.
17 So, what they needed to do was pick a cycle that
18 made sense for the majority of vehicles and then adjust it
19 for the very extremely low-powered vehicles.
20 Even with the FTP, the Volkswagen bus today can't
21 keep up with it. I think that the representativeness issue
22 is addressed somewhat by our discussion about the
23 lean-on-cruise.
24 In other words, when we originally put the cycle
25 together, it had extended cruises in it, which made it
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1 represent exactly what is happening in-use.
2 The length of the test, hence the cost, became
3 unwieldy, and so what was done was the test was compressed
4 down to the most significant events, and the lean-on-cruise
5 language was added on to deal with the extended cruises.
6 So, we and industry both agree, other than
7 Mr. Bohanan here, I think that we agree that the test is a
8 good one, and it represents driving conditions
9 appropriately.
10 On the test facilities, we have identified three in
11 California which would be willing to work with Mr. Bohanan on
12 doing the develop work.
13 CHAIRMAN DUNLAP: I encourage them to work with
14 him, because, I mean, the folks that you represent are
15 businessmen and women that are trying to not only to make a
16 livelihood out of their chosen business but they want to help
17 us.
18 Some may argue about that on occasion, but we know
19 your motives are good motives overall, and we want to be sure
20 that you are included in the process to the extent that we
21 can.
22 We know you are not big guys. We know that you are
23 not OEM's, and you are somewhat at the mercy of the process
24 and the larger manufacturers. We understand that.
25 What we will do is we will do all that we can
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1 administratively to work with you to be as predictable as
2 possible.
3 Mr. Cackette and Mr. Cross, I can count on you to
4 be inclusive in that process.
5 MR. BOHANAN: I would like to thank you for that.
6 We want to demonstrate that our products are
7 compliant.
8 We do need test facilities to do that. The issue
9 that we have with the cycle primarily is with the frequency
10 of the high speed events.
11 While it is true the cycle only goes up to 80 miles
12 per hour, it speeds up to 95 miles per hour included in the
13 data set to define the cycle.
14 We just feel that the high speed events which drive
15 the need for single rolls are excessive. If you don't have
16 those high speeds and you bring down the accelerations, then
17 you can still use the existing rolls.
18 It is a lot of facilitation that is being spent of
19 what we feel is utilization that is of very infrequent
20 occurrences.
21 CHAIRMAN DUNLAP: Good point. We appreciate that.
22 That does it for the witnesses.
23 Ms. Hutchens, is there anyone else that signed up?
24 We have had a chance to query the witnesses.
25 Any questions of staff, any of the Board Members
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1 have questions on this item?
2 Just while we are thinking about it, just a comment
3 to my colleagues on the Board, what this does for us, I
4 think, as a Board, is it more accurately reflects the driving
5 patterns of California drivers.
6 If we continue, it seems to me, to lead the nation
7 like we have always done in this area, and it also shows some
8 harmonization qualities with the Federal Government, which is
9 something that we strive to do, it has been a priority of
10 Mr. Kenny and his team at our direction.
11 We have the elements of a fine proposal here.
12 MR. CACKETTE: If I could add one thing.
13 Emission reductions are large. The size of those
14 tons is on the same order of magnitude of the entire Smog
15 Check Program. It is big step for clean air.
16 MR. CALHOUN: Let me also add to what Mr. Kenny is
17 saying that this is probably one of the most significant
18 regulations relative to automobiles since I have been on the
19 Board.
20 I am sure that it was something that was omitted
21 because people were not aware of it. Now that we are aware
22 of it, something is being done about it.
23 CHAIRMAN DUNLAP: Good point.
24 Tom, about the emissions associated with it, could
25 you remind us of that number?
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1 MR. CACKETTE: The number was 133 tons per day on a
2 statewide basis in 2020.
3 There was a time split here. It was 80 some tons
4 in 2010. The Smog Check benefits are on the order of 112 for
5 those areas that are subject to enhanced I and M. Apples and
6 oranges, but the point it was not five or ten.
7 It is big.
8 CHAIRMAN DUNLAP: Well, you have another reference
9 going.
10 Cleaner burning gasoline was in excess of 300 tons
11 per day. That was our precursor.
12 So, this is a very, very large significant
13 measure.
14 SUPERVISOR RIORDAN: Isn't it also cost effective,
15 too?
16 I mean that has to be stressed, I think, a bit, to
17 remind ourselves.
18 MR. CACKETTE: We don't want to set this as a
19 benchmark.
20 Our benchmark has been about five dollars a pound,
21 and this is cents per point, so it is very attractive.
22 CHAIRMAN DUNLAP: Okay. Ms. Edgerton, do you want
23 to say anything before we wrap this up?
24 MS. EDGERTON: I had a question.
25 I think my colleagues have brought out the
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1 significance of this, and I have reflected the scrappage
2 program, which we probably will not see the numbers, emission
3 from it, but it supposedly is around 10 tons a day.
4 CHAIRMAN DUNLAP: 25.
5 MS. EDGERTON: Well, I'm thinking of the light-duty
6 part of it, 10 in light-duty and 15 in heavy-duty makes 25.
7 MR. KENNY: And one is 25.
8 MS. EDGERTON: Then the 10 is NOx, I guess, or is
9 it the other two?
10 The 25 including the NOx and the -- okay, 25 tons.
11 I stand corrected. My question rises from
12 Mr. Bohanan's testimony.
13 He, if I understand the letter and his testimony
14 correctly, the affordability of the test was a big issue, and
15 he has alleged that they couldn't do the test, so they could
16 come in and tell us whether our proposal was well done.
17 What I was wondering was about that.
18 CHAIRMAN DUNLAP: They need more expensive dyno
19 equipment to be able to replicate the test using existing
20 resources and systems that they already have.
21 He is asserting that they would have to upgrade,
22 and it costs them a couple million dollars to that, and it
23 worries them.
24 MS. EDGERTON: And I appreciated, Mr. Chairman,
25 your sensitivity to that.
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1 I appreciate it very much, because I understand
2 that it is going to be an effort to try to help them.
3 CHAIRMAN DUNLAP: Lynn, on that point, we have some
4 staff sensitivity and commitment that they are going to work
5 to help them to find facilities that they can access to be
6 able to do the test, and we are going to more than tell them
7 to spend two million bucks, which is important, I believe,
8 from Mr. Bohanan's ability to be impactive and help us in
9 solving the problem here.
10 MS. EDGERTON: Good.
11 That really does solve it.
12 I was going to ask if there was any concern, what
13 was the affordability relative to the profit margin that they
14 had, but I will withdraw that question.
15 CHAIRMAN DUNLAP: Okay. Mr. Bohanan, we work
16 through our staff, as you know, we need to do that or else we
17 would have all 11 of us running around looking at a lot of
18 different things in an unorganized fashion.
19 We would like to hear back from you on how that
20 goes with our staff. So, I am inviting you to write us a
21 letter in six months or a year and tell us how it is going.
22 With that, I ask staff to summarize the written
23 comments and remind staff that brevity is a virtue.
24 MS. NOLAN: Comments were also received from
25 Volkswagen, and they are identical to those provided by Mr.
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1 Dana, of AIAM, regarding exemptions for diesel and lean-burn
2 gasoline technology, and that is it.
3 Kathleen Nolan.
4 CHAIRMAN DUNLAP: Thank you.
5 We have Volkswagen's comments.
6 Why don't we, at this juncture -- well, we will do
7 it in a moment.
8 Mr. Kenny, do you have any closing comments?
9 MR. KENNY: Not really.
10 I just think that it is quite apparent what the
11 significance of the proposal is, and I would simply recommend
12 to the Board that they adopt it.
13 CHAIRMAN DUNLAP: Very good.
14 I will now close the record on this Agenda Item.
15 However, the record will be reopened when the 15-day notice
16 of public availability is issued. Written or oral comments
17 received after this hearing date but before the 15-day notice
18 is issued will not be accepted as part of the official record
19 on this Agenda Item.
20 When the record is reopened for a 15-day comment
21 period, the public may submit written comments on the
22 proposed changes that will be considered and responded to on
23 the final Statement of Reasons for the regulations.
24 Just a reminder to the Board about ex parte
25 communications, while we may communicate off the record with
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1 outside persons regarding Board rulemaking, we must disclose
2 the names of our contacts and the nature of the contents on
3 the record.
4 Anything to report?
5 Very good.
6 We have before us a Resolution, Resolution 97-34
7 that we have had for some time. Mr. Kenny and his team have
8 done a good job of getting them to us in advance, so we have
9 seen them and had a chance to review them.
10 The Chair would certainly appreciate a motion.
11 MR. CALHOUN: Mr. Millerick said that the staff had
12 worked with them to remove the showstoppers, and I did not
13 hear any testimony from the SEMA or AIAM representative
14 today, and I am, therefore, willing to move adoption of
15 Resolution 97-34.
16 CHAIRMAN DUNLAP: Okay. Second by Dr. Friedman.
17 Any discussion on the motion to adopt Resolution
18 97-34?
19 Hearing none, we will proceed with a voice vote.
20 All those in favor, say aye.
21 Any opposed?
22 Very good. Motion carried unanimously.
23 Mr. Cackette, before you excuse your team, would
24 you introduce them to us?
25 MR. CACKETTE: I will.
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1 First I wanted to comment that this has been a
2 fairly long process, and I think it represents one of the
3 more successful regulatory efforts in that we reached
4 consensus. It was not without a tremendous amount of work on
5 our part and on the industry's part.
6 Probably the best characterization here is that it
7 was a data driven development. When we had conflicts, we
8 went out and found cars, and we tested them, the industry
9 did, and we tended to live by the results.
10 As a result, that is probably at the heart of the
11 consensus. Bob Cross, Division Chief for the Mobile Source
12 Controls Division, gets a great deal of credit, because he
13 sort of personally has led this effort.
14 As always, we in management recognize that we only
15 look good when our staff does great staff work. This is a
16 case where a number of people did extraordinary efforts, and
17 I think a common theme was that no one was willing to give up
18 anything until they were absolutely convinced and put in the
19 work to show that there was a reason to move from what our
20 original belief would be on this area.
21 With that, I would like Bob to introduce people and
22 give a little short description of the kind of role that each
23 one played.
24 Without this dedicated and very hard effort, we
25 would not be here today with this proposal.
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1 MR. CROSS: Thank you for the kind words.
2 To my right is Mike Carter, who reports to me as
3 Branch Chief in this activity. He's the, how can I say it,
4 the day-to-day lead negotiator on many of the details of the
5 proposal.
6 To his right is Kathleen Nolan, who is the Section
7 Manager, who also, obviously, deals with this stuff on a
8 daily basis, reviewing the draft language, working on the
9 reports with the staff.
10 The staff that suffered with it the most are Susan
11 Kwan, who gave you the presentation, and David Parker.
12 Susan is primarily our author and lead person, and
13 without her, I don't think that we could have gotten through
14 this.
15 David has provided the technical expertise and data
16 analysis that has helped us get there. David basically
17 innovated the calibration techniques that were used on the
18 test vehicles that we used to demonstrate the levels that
19 were achievable.
20 David was out there basically in the lab almost on
21 a daily basis monitoring the test programs and monitoring how
22 the vehicles were doing.
23 Also, as Tom said, whenever an industry would come
24 up with an issue, or a counter proposal, David would
25 immediately rent a passel of vehicles and find out whether or
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1 not what was being discussed was in fact true from the
2 regulators point of view.
3 This has been one, for me, it has been one of the
4 most interesting and pleasurable regulatory items that I have
5 worked on because of the quality of data and the input that I
6 have been getting as a Manager, which has made it really easy
7 for me to draw the lines in terms of negotiations with the
8 industry.
9 I would like to commend the four of them for the
10 work they have done, and second, I would like to also point
11 out that this process would not have been possible without
12 industry dealing with us in a forthright manner.
13 You can't have a productive negotiation if one side
14 refuses to negotiate. I think that industry's part in this
15 needs to be recognized.
16 Obviously, both sides did their jobs in terms of
17 getting more out of the negotiation. I think what we ended
18 up with is a darn good proposal that reflects technically the
19 right thing to do.
20 I think we are all very proud of that.
21 CHAIRMAN DUNLAP: Well said. Thank you.
22 Congratulations.
23 Let's move on to the second item, 97-6-2, a public
24 meeting to consider a draft report on Planned Air Pollution
25 Research, a 1997 update.
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1 This item is the annual update of the Board's
2 Planned Air Pollution Research efforts, and the Research
3 Projects proposed in this document were reviewed by the Board
4 and Research Screening Committee on April 25 and June 18.
5 I would like to take this opportunity to welcome
6 the members of the Research Screening Committee.
7 We will have the opportunity to introduce you
8 formally in a few moments. We will welcome you again this
9 year.
10 As most of you know, this Committee was established
11 by law to advise the Board as we develop and implement our
12 Research Program and to recommend for approval the Research
13 Proposals that are designed to meet the objectives that we
14 establish.
15 The plan is updated annually, and the staff tries
16 to ensure that it reflects the Board's current concerns and
17 priorities.
18 At this point, I would like to ask Mr. Kenny to
19 introduce the item as soon as people take their places.
20 MR. KENNY: Thank you, Mr. Chairman and Members of
21 the Board.
22 Today we wanted to present for your consideration
23 the Annual Update of the Board's Planned Research.
24 The Research Planned Update, as you know, is
25 developed over the course of several months by the staff with
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1 assistance of the Research Screening Committee.
2 We are very appreciative of the assistance provided
3 by the Research Screening Committee. At this point I would
4 like to introduce Professor Hal Cota, Chairman of the
5 Research Screening Committee, who will present the Committee
6 to us and provide comments on this year's research
7 highlights.
8 PROFESSOR COTA: Good morning, Chairman Dunlap and
9 Members of the Board.
10 It is a pleasure to join you again this year as
11 Chair of the Research Screening Committee.
12 Before I make a few comments, I would like to have
13 the Members introduce themselves. Let me start off.
14 My name is Harold Cota. I'm a Professor of
15 Environmental Engineering, at Cal Poly, at San Luis Obispo,
16 and I'm Director of the Cal Poly EPA Training Center, whose
17 mission is to assist in training on air pollution matters,
18 Federal, State or local employees.
19 One of my research interests is the chemical
20 engineering side of air pollution control.
21 PROFESSOR FUCALORO: My name is Anthony Fucaloro,
22 and I am the Dean of the Faculty at Claric Mechanic College
23 but also a Professor of Chemistry at same.
24 PROFESSOR HOEKMAN: My name is Ken Hoekman.
25 I trained as an Organic Chemist, and I have been
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1 employed by Chevron the last 17 years. During most of that
2 time, my work primarily involved issues related to fuels and
3 vehicle emissions and the impact of those emissions on air
4 quality.
5 PROFESSOR ORTNER: I am Jim Ortner.
6 I am the Manager of Alternative Fuels and the Air
7 Quality Programs for the Orange County Transportation
8 Authority, and I am also on the faculty at USC and UC Irvine,
9 where I teach courses that deal with the interaction of
10 transportation and air quality.
11 MR. TAYLOR: Tim Taylor.
12 I am an environmental attorney, in Sacramento, and
13 I am also am a Professor of UC Davis School of Law.
14 PROFESSOR COTA: We have another member who
15 couldn't make it today, Dr. Hoekman, who is Associate
16 Professor of Physics -- oops, sorry.
17 PROFESSOR ZELDEN: I'm always the last, because of
18 the Z.
19 My name is Mel Zelden. I am the Director of
20 Applied Science and Technology Division, of the South Coast
21 Air Quality Management District.
22 My professional training area is in meteorology.
23 Pleasure to be here.
24 Thank you.
25 PROFESSOR COTA: Sorry, Mel.
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1 James Hoekman who is an Associate Professor of
2 Physics, at Clairmont McKinney College, couldn't join us
3 today. Dr. Hoekman is an expert in Space Physics.
4 PROFESSOR FULCARO: Could I just say one thing.
5 As of July 1, Professor Hoekman is no longer an
6 Associate Professor but a full Professor and also is as an
7 academe, one of 200 physicists named as Fellows of the
8 American Physical Society.
9 PROFESSOR COTA: Thanks, Tony.
10 I would like to make a few comments.
11 First, speaking on behalf of the Committee, it is
12 certainly a pleasure to serve the Board and provide the staff
13 and the Board with assurance that the research projects that
14 come before you are peer reviewed.
15 Really this assurance comes from the Screening
16 Committee Members' technical expertise and their dedication.
17 Last year we had many important results based on
18 our research proposals. I would like to mention two of
19 them.
20 One completed project, Emission Factors for Air
21 Toxics, involved the use of data from the emission test in
22 industrial facilities in California.
23 The data was used to develop toxic emission factors
24 to support the ARB's emission inventory development for the
25 air toxics program.
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1 The factors developed in this study will relieve
2 small facilities the burden of local testing. They will
3 permit ARB staff to respond to requests for technical
4 information regarding toxic emissions and to evaluate the
5 cost effectiveness of proposed control measures.
6 Another major highlight is the Continuing
7 Children's Health Study. This study should provide
8 information on long-term health effects of pollution, an area
9 in which there is very little data.
10 I am sure that you will agree that it is as
11 critical for your Board to have this information as you
12 consider the future regulatory action.
13 Over 4,000 children are now enrolled in this study
14 from 12 Southern California communities. Phase 1 was a
15 planning phase, and Phase 2 compared the lung health status
16 of children in the various communities.
17 The results of Phase 2 are about to be released.
18 Phase 3, which is really the longest part of this study, is
19 progressing well.
20 It is tracking the health status of individual
21 children and the development of their lungs related to air
22 quality.
23 I would like to highlight one new research project
24 for you that we have great hopes of obtaining important
25 information that should help guide your Board in making
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1 decisions on forthcoming issues.
2 Heavy-duty diesel trucks are substantial
3 contributors to the NOx and particulate matter emission
4 inventory. The State Implementation Plan for ozone relies on
5 emission reduction from these trucks.
6 A research study has just began that will develop
7 data on the population, the activity of these trucks
8 operating in Southern California.
9 This activity data includes the numbers and types
10 of trucks, vehicle miles traveled and the type of use.
11 Using this data, the contractor will develop
12 emission estimates by subpopulation to help target segments
13 within the trucking industry where the greatest emission
14 control benefits will be achieved.
15 Market-based incentive programs are being developed
16 that need to encourage trucking fleets to use low-emission
17 vehicles in operation practices, such as reduced idle. The
18 staff expect to recommend the most cost effective option to
19 the Board.
20 Finally, I would like to thank Dr. Holmes and his
21 staff in their efforts to provide the Research Screening
22 Committee with timely staff reviews so we can better evaluate
23 the projects that come before us.
24 I would like to express my respect to the Board and
25 its staff. It is a pleasure to serve you as you steer a
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1 course to provide maximum environmental protection.
2 We hope we will be able to assist you as you make
3 decisions that lead to healthful air in California.
4 I will turn this presentation back now to
5 Mr. Kenny.
6 MR. KENNY: Thank you, Professor Cota and also
7 Members of the Research Screening Committee.
8 The planned research is key directly to the Board's
9 long-term goals and objectives. As Executive Officer, I have
10 established eight research teams within the staff of the Air
11 Resources Board.
12 These teams met to discuss the ways in which
13 research projects can help us move more efficiently towards
14 the Board's objectives.
15 This past year we introduced a process for
16 soliciting research items from the public. Each team
17 identified its research projects, reviewed the public's
18 ideas, prioritized both public and in-house concept papers
19 and submitted them to the Executive Review Committee.
20 This Committee, which I Chair, these are my two
21 deputies, Tom Cackette and Mike Scheible, the Assistant
22 Executive Officer, Lynn Terry, and Research Division Chief,
23 John Holmes.
24 We spent many hours reviewing each team's list of
25 proposed projects and discussed how they would help us to
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1 meet the Board's objectives, the stated objectives of the
2 Governor's budget and the Administration's goals and to be
3 sure they correspond to what we perceive to be the Board's
4 priorities.
5 We cannot, of course, do all of the projects that
6 everyone wants to have done. The budget simply doesn't
7 permit it.
8 The final task of the Executive Review Committee is
9 to decide which projects are to be scaled back or postponed
10 to future years.
11 In addition, we added a new grouping for projects
12 proposed this year, called Recommended if Funding Becomes
13 Available, and placed several projects into this grouping.
14 After we have done this, the proposed projects go to the
15 Research Screening Committee for their review and comment.
16 As you know, further amendments may be made at the
17 Committee's suggestion.
18 The proposed Extramural Research Budget for fiscal
19 year 1997-98 is $3.469 million. The plan shows how this
20 budget would be allocated to the recommended projects in the
21 various program areas.
22 In addition to the Extramural Research Programs,
23 the Board does sponsor research under several other programs
24 for which Legislature has provided more narrowly defined
25 agendas.
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1 Those are under your statute or in specific budget
2 requirements. These programs which are periodically reviewed
3 by the Board are listed for your information on page five of
4 the plan.
5 The research for these programs does not appear in
6 the plan before you today. Let me add that the proposed
7 budget includes continued funding for programs such as the
8 Children's Health Study and Innovative Clean Air Technology
9 Programs, or ICAT.
10 The other programs are carefully coordinated with
11 the Board's Extramural Research Program, and the resulting
12 research projects are also reviewed by the Board before
13 contracts are awarded.
14 Now, I would like to suggest that we go to the
15 actual Research Plan, and I would like to introduce Ralph
16 Propper, who will take us through that.
17 MR. PROPPER: Good morning, Mr. Chairman and
18 Members of the Board.
19 In accordance with the California Health and Safety
20 Code, the Air Resources Board carries out a comprehensive
21 program of research into the causes and effects of air
22 pollution in California, as well as possible solutions.
23 In planning the research program, we try to look
24 ahead to address upcoming environmental problems and
25 regulatory needs.
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1 The ARB's Mobile Source Control, its Stationary
2 Source, Technical Support and Monitoring Laboratory Divisions
3 all play major roles in designing a Research Program and are
4 actively involved in the research team established by
5 Mr. Kenny.
6 Each team is represented here today to answer any
7 questions you may have on specific programs or project
8 areas.
9 We have also reached out beyond the ARB staff to
10 solicit ideas from the public regarding appropriate research
11 projects that would advance your policies.
12 Last October we hosted a Stakeholders Conference
13 for this purpose. In April we hosted a Public Workshop on an
14 earlier version of the Draft Research Plan.
15 Last month, we met with the staff of the South
16 Coast AQMD to coordinate our research programs. The document
17 you received includes an introduction outlining how the plan
18 was put together and a brief description of the proposed 27
19 new research projects.
20 Appendix One is budget, providing titles and
21 anticipated costs of the new projects. As Mr. Kenny
22 mentioned, this year we have placed the proposed new research
23 projects into two bins.
24 In Appendix 1, 19 are listed under Recommended,
25 while 8 are Recommended if Funding Available.
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1 Appendix 2 provides one-page descriptions for each
2 team project. They are arranged by research team
3 categories.
4 In addition, we expect to have an updated summary
5 of completed research available next week. If you approve
6 the plan, we will combine it with this summary to provide
7 more comprehensive review of our past, present and future
8 Extramural Research Program.
9 We have grouped the proposed projects of the
10 research teams into four general program areas, as shown on
11 this slide.
12 Our research projects are designed to address
13 specific needs of the ARB. Proceeding by program area, I
14 will show you the new projects we plan to initiate this
15 fiscal year.
16 Six projects are proposed in the first program
17 area, Motor Vehicles and Fuels. Three of these projects deal
18 with zero emission vehicles and electric vehicles, as shown
19 on this slide.
20 The next slide shows the remaining three projects
21 in this program area. Two are concerned with evaporative
22 emissions, while the last one is aimed at reducing NOx
23 emissions from heavy-duty vehicles.
24 Two new projects are proposed in the next program
25 area, Toxic Air Contaminants. One would evaluate ambient
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1 lead levels, while the other one would evaluate the
2 effectiveness of the Air Toxics Program.
3 Under the California Clean Air Act, the ARB
4 provides technical assistance to local air districts to
5 support the air activity. We are proposing 15 new projects
6 to support the Board's responsibilities under this Act.
7 These are being further grouped into four
8 subcategories as shown, stationary sources, regional air
9 quality, economic studies and long-term studies.
10 The next slide shows two of the four projects in
11 the subcategory, stationary sources. These two are directed
12 at particulate matter arising from traffic on roads.
13 The next slide shows the two remaining stationary
14 source projects.
15 One is speciation of emissions from fuel
16 combustion, while the other is focused on reducing emissions
17 from coatings.
18 Six projects are proposed in the regional air
19 quality subcategory. This slide shows the first four
20 projects in the subcategory, all of which are designed to
21 improve ARB's modeling capabilities.
22 The next slide shows the two remaining projects in
23 this subcategory. The first would improve our emissions
24 inventory, while the other would assist with regulation of
25 stationary sources.
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1 The next slide shows the first of four projects
2 included in the economic studies subcategory. Due to the
3 deregulation of the electric utility industry, we expect to
4 see more distributed generation.
5 The next slide shows the three remaining projects
6 in economic studies. They are designed to improve our
7 understanding of the costs and benefits of air pollution
8 control.
9 The next slide shows that one project is proposed
10 in the Long-term Study subcategory. It would help quantify
11 emission reduction from public education programs.
12 The California Ambient Air Quality Standards are
13 based on a need to prevent or minimize adverse health and
14 environmental effects.
15 We have two subcategories for air quality
16 standards, health effects and ecological effects. Two
17 projects are proposed in the Health Effects subcategory, as
18 shown on this slide.
19 One deals with effects of nitric oxide and the
20 other deals with smoke from biomass burning. Two projects
21 are proposed in the ecological effects subcategory, as shown
22 on this slide.
23 These are concerned with ozone injury to trees and
24 the effects of air pollution around Lake Tahoe. It is timely
25 right now.
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1 As Mr. Kenny noted in his introduction, we hope to
2 have an Extramural Research budget of just under $3.5
3 million.
4 This corresponds to the total anticipated costs for
5 the 19 proposed new projects that are recommended for this
6 fiscal year.
7 This pie-chart shows the proposed allocation for
8 these projects among the various program areas. Both Motor
9 Vehicles and Fuels and California Clean Air Act would each
10 receive about two-fifths of the funding, while Toxic Air
11 Contaminants and Air Quality Standards would each receive
12 about a tenth.
13 Let me add that funds for this last program area
14 for Health Effects Research are actually somewhat higher, due
15 to monies provided from sources other than the Extramural
16 Research budget.
17 I would now like to describe the next steps in the
18 process. The projects that I have mentioned are now in the
19 conceptual stage.
20 Unless something is changed, with your approval,
21 you may expect to see most of them presented to you again as
22 proposals for research, after thorough review by our
23 colleagues behind me, our Research Screening Committee, or
24 RSC.
25 We will prepare the draft request for proposals or
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1 draft interagency agreements that are based on proposed
2 projects. We expect that most contracts will result from
3 request for proposals, or RFP's.
4 We prepare a draft RFP that we circulate after we
5 receive comments and approval by the RSC. All proposals that
6 we receive in response are rated by a group of technical
7 reviewers, often including experts from outside of the ARB,
8 using criteria contained within the RFP.
9 We then present our review and make a
10 recommendation to your Research Screening Committee. The
11 primary procurement method requires us to open a document
12 containing the bid price after the RSC votes to determine the
13 qualified bidder or bidders.
14 From these bidders, we review the proposed budgets
15 and recommend the bidder with the lowest price. The joint
16 staff-RSC recommendations will be presented in a resolution
17 package.
18 In fact, today, you have such a Resolution package
19 for an External Research proposal. This package contains a
20 Project Summary, a Proposed Resolution and a Budget Summary.
21 The Project Summary describes what the contractor
22 will do, and what they expect the product will be, and when
23 it will be delivered and how the results will be useful for
24 the Board's programs.
25 The Resolution, with your concurrence, authorizes
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1 staff to execute a contract for the research effort at a
2 specified cost.
3 The Budget Summary page outlines both direct and
4 indirect costs, and it results from staff's review of the
5 bidder's budget proposal.
6 We will discuss budget aspects in greater detail
7 later. I will now turn the presentation over to Dr. John
8 Holmes, Chief of ARB's Research Division.
9 DR. HOLMES: Thank you, Ralph.
10 Mr. Chairman and Members of the Board, unless there
11 are questions at this point, we would like to take a few more
12 minutes and go beyond the plan and talk to you briefly about
13 the administrative processes that the staff and the Screening
14 Committee have to go through in order to bring a proposal to
15 you and also expand briefly on the various notations that you
16 see on the budget pages that come along with the Resolutions
17 for approval of research projects.
18 First of all, we have asked Ms. Theresa Parsley, of
19 the Administrative Services Division, who is the head of the
20 contracts process at ARB, to explain some of the
21 administrative limitations that we have had, and then I have
22 asked Mr. Manjit Ahuja to take you through the various lines
23 of the budget summaries that you see every month in your
24 Resolution package.
25 Let's begin with the administrative side, Ms.
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1 Parsley.
2 MS. PARSLEY: Thank you, Dr. Holmes, good morning
3 to all.
4 Local Governments, State Governments and Federal
5 Government all have safeguards in place in form of
6 regulations and procedures to ensure competitiveness and
7 provisions for complete and useful products and appropriate
8 use of public funds.
9 Safeguards at the local level often provide
10 flexibility that allow the local officials to quickly address
11 the needs of their communities.
12 Within the Federal Government, there is strict
13 guidance given in the form of Federal Acquisition Regulations
14 that address needs at the national level.
15 I am here to talk about the State of California's
16 contracting process. There are a variety of Government and
17 Public Contract Codes that govern the State's contracting
18 procedures.
19 These procedures are contained in the State's
20 Administrative Manual, or SAM. They have been developed over
21 many years and come from the Department of General Services,
22 or DGS, as they interpret and apply statute and applicable
23 court action.
24 Among other purposes, these codes and procedures
25 are to intended to protect competition for businesses that
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1 choose to compete for contracts with the State of
2 California.
3 Whether in developing a request for proposal, and
4 receiving bids, evaluating submittals, or awarding our many
5 contacts, every effort is made to ensure fair treatment of
6 contractors.
7 From the time that a request for proposal, or RFP,
8 is released, until the contract is completed, the contract
9 managers and the research division and the administrative
10 staff and the Administrative Services Division must follow
11 the procedures set forth in SAM.
12 The consequences of not doing so include the
13 potential for protest, which at a minimum delays the
14 completion of work, may require us to start over again and
15 may impact on the contract's funding and ultimately could
16 threaten our overall DGS contract delegations.
17 When you consider that the standard contract time
18 frame from start to finish takes between six to eight months,
19 you begin to understand that to deviate from State procedure
20 could mean up to a two-year contract development and
21 execution process.
22 SAM lays out for staff several strict selection
23 processes and evaluation methods that must be applied in
24 meeting our program needs through contracts.
25 The specifics of each process are not as important
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1 to this discussion as the guiding principles which we must
2 operate within them.
3 That is because a technical review of the proposal
4 by ARB staff and outsiders here, such as the Research
5 Screening Committee, will occur, no matter what solicitation
6 method is used or what selection process applied.
7 A winning proposal will be selected assuming at
8 least one is shown to be technically valid. The challenge to
9 the staff is to develop a solicitation that clearly states
10 our complete needs.
11 This is very important because staff can only
12 select or reject proposals based on the criteria specifically
13 identified in that solicitation.
14 This means that if in our review of responses to
15 the solicitation we discovered that we should have asked for
16 certain technical items and did not, staff has no basis for
17 rejection of that proposal.
18 In other words, if the bidder gave us a proposal
19 that is deemed to be responsive to the solicitation, we
20 cannot reject it.
21 Similarly, in a competitive bidding process, we
22 must accept the cost proposal as submitted by the bidder.
23 Staff cannot reject nor can they negotiate on that proposal.
24 If we believe that cost or any other non-specified
25 element of the proposal is unreasonable, we must reject all
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1 bids and begin the solicitation again.
2 I believe that this can be a frustrating
3 experience. However, Public Contract Code and SAM have been
4 developed to balance many interests and needs as defined by
5 the priorities of the State of California.
6 As I indicated earlier, it is a priority of the
7 State to ensure that its Boards and Departments provide
8 contract opportunities that are public and available to any
9 qualified and interested contractor to ensure that State
10 funds are expended responsibly and conserved as much as
11 possible and, perhaps most importantly, to protect its assets
12 by ensuring that contracts executed under its authority are
13 done so legally.
14 I hope my message today is clear, that is, that we
15 have Statewide administrative priorities and perspectives,
16 and we also have Boardwide programmatic needs and issues.
17 The Board's Technical and Administrative staff work
18 hard to operate in a manner that satisfies all needs and
19 addresses all issues.
20 As defined and applied by the Department of General
21 Services, we have very little latitude when we start to
22 impact one of our most important guiding principles, that is
23 to keep an even playing field and protect competition in our
24 contract efforts.
25 Among many other demands, we must make sure that no
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1 changes occur within the process once a request for proposal
2 has been released that could give a competitive edge to one
3 group or contractor over another.
4 We do continue, however, to try to improve the
5 process and make it more responsive to our needs. Where we
6 can, we press for restructuring and additional flexibility in
7 department level decision making.
8 Mr. Manjit Ahuja, of our Research Division, will
9 continue this presentation with a more detailed discussion of
10 processes and procedures, specifically focusing on budget
11 related reviews.
12 MR. AHUJA: Thank you, Ms. Parsley. Good morning,
13 Chairman and Members of the Board.
14 For the record my name is Manjit Ahuja. Some
15 Members of the Board have raised concerns about our research
16 contracts especially regarding indirect costs.
17 I will discuss what goes into the preparation of
18 resolutions for Extramural Research contracts with emphasis
19 on our review of project budgets.
20 After defining direct and indirect costs, I will
21 pay special attention to the issue of indirect costs. Before
22 I begin this discussion, I need to point out that most of our
23 research contracts result from use of the State's primary
24 procurement method.
25 This method requires us to award a contract to the
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1 lowest-cost responsive bidder, regardless of the way that
2 bidder proposes to allocate costs.
3 In addition, we are not legally able to negotiate
4 any cost aspects with the prospective contractor. The direct
5 cost part of the budget summary provides a breakdown of
6 costs.
7 The first line item, labor and employee fringe
8 benefits, includes all hourly labor charges. The remaining
9 line items are for per-item costs.
10 For example, if laboratory analyses are charged on
11 a per-hour labor basis, they would be included in the first
12 line item.
13 However, usually laboratory analyses are conducted
14 on a per-sample basis and will appear in a subsequent line
15 item.
16 This slide shows all the line items under direct
17 costs. The indirect cost portion of the budget summary
18 includes overhead, general and administrative expenses, other
19 indirect costs, and fee or profit.
20 For many years, we have paid great attention to
21 indirect costs. We are also aware that indirect costs have,
22 in the last few years, become an important issue at all
23 levels of government.
24 We require our contractors to use lower indirect
25 cost rates. However, in order to conduct quality research,
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1 our contractors do need reasonable reimbursement for their
2 indirect costs.
3 In reviewing the project budget information, we
4 rely heavily on the indirect cost rates approved by the
5 Federal Audit Agencies.
6 Agencies, such as the Defense Contract Audit
7 Agency, or DCAA, the Environmental Protection Agency, that is
8 EPA, and the Department of Health and Human Services, DHHS,
9 subject each contractor to an extensive audit before they
10 determine an approved indirect costs rate.
11 Your package includes an example of a letter from
12 the DCAA to a contractor that authorizes a particular
13 indirect cost rate, which includes general and administrative
14 expenses of 21 percent, overhead rate of 66 percent and
15 fringe benefit rates of 41 percent.
16 As the slide shows, this adds up to a provisional
17 billing rate for indirect costs of 128 percent.
18 This does not include fee or profit. I will
19 discuss fee and profit later in my presentation.
20 We rely heavily on these Federal Audit Agencies for
21 approved indirect cost rates, because we do not have our own
22 audit department.
23 When prospective bidders submit proposals to us, we
24 require that they sign a budget submittal form. That
25 responds to the question shown on this slide: Have you used
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1 Federally approved or lower rates or schedules for computing
2 overhead or other indirect costs in this proposal?
3 If so, they must include a copy of a letter from
4 the reviewing agency approving the rates used for this
5 proposal.
6 For those companies that do not have Federally
7 approved rates, we request them to give the reasons and
8 explain how their rates are competitive.
9 Contractors generally have two indirect cost rates,
10 one for Federal contracts and the other for commercial
11 contracts.
12 The Federally approved rates generally tend to be
13 lower that the company's commercial rates. This slide shows
14 three reasons why one may argue that rates for the State's
15 contracts should be closer to commercial rates rather than
16 Federal rates.
17 First, Federal contracts are generally based on a
18 cost plus fixed fee as opposed to the State contracts that
19 are firm fixed price contracts.
20 This means that if a contractor's cost increases
21 over what was expected, the Federal Government may, in fact,
22 pay the increment along with a percentage fee on top of the
23 increased cost.
24 In contrast, the State's full fixed price contracts
25 provide no mechanism to reimburse contractors when they
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1 encounter unexpected increased costs.
2 The Federal Government may allow increases in the
3 overhead costs. If the contractor can show a basis to
4 justify increased overhead costs, the contractor may be able
5 to recover these costs in a subsequent year of the contract.
6 The State does not allow this.
7 And third, the Federal Government engages in a huge
8 volume of contracts. As a result, it has great negotiating
9 power to obtain favorable rates from contractors.
10 About seven years ago, we changed the budget forms
11 to request bidders to use Federally approved rates. Although
12 some contractors expressed a reluctance to provide the State
13 with the overhead rate and other indirect cost rates, most
14 ultimately agreed to do so.
15 Their reluctance was based on the three factors I
16 just mentioned. As this slide shows, the bottom line is that
17 we require our contractors to charge the lower Federal
18 indirect rates when appropriate and possible.
19 We have reviewed in detail the Federally approved
20 rates for several types of ongoing studies. We have found
21 that fringe benefits are almost always a percentage of direct
22 labor costs.
23 As this slide shows, examples of allowable fringe
24 benefits include holidays, vacation and sick pay, employee
25 training, health and life insurance, and social security and
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1 pension programs.
2 This slide shows examples of overhead costs. These
3 are usually also a percentage of direct labor costs.
4 Allowable overhead costs may include rent,
5 utilities and depreciation of equipment. Overhead costs are
6 generally based on the contractor's investment in office
7 equipment and other necessary facilities.
8 Therefore, a contractor that has invested in an
9 automotive testing facility will have higher overhead cost
10 rates than another contractor that has no such facilities.
11 This slide shows the general and administrative
12 expenses, which may include costs for quality control and for
13 preparation of accounting and tax reports.
14 These expenses are usually a percentage of total
15 direct costs and not total labor costs. Different companies
16 may choose to put a particular cost, for example, supervisor
17 and support staff salaries, into either the overhead cost
18 category or the general and administrative expense category.
19 Therefore, when comparing the costs of one
20 contractor with another, it is better to sum these rates,
21 even though they are charged on different bases rather than
22 to look at them individually.
23 This gives us an approximate, relative comparison
24 of the total indirect costs and how they vary from one type
25 of contractor to another.
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1 Federal Audit Agencies generally do not approve
2 rates for fee or profit. To help us determine whether a
3 bidder's proposed profit rate is reasonable.
4 We refer to guidelines in the Federal Acquisition
5 Regulations, or FAR. The FAR explains why it is in the
6 Government's interest to offer contractors opportunities for
7 financial rewards.
8 The FAR states that for research work performed
9 under a cost-plus-fixed-fee contract, the fee shall not
10 exceed 15 percent of the contractor's estimated cost,
11 excluding fee.
12 Although the profits charged by our contractors do
13 vary, they are generally less than 10 percent.
14 I would like to point out that Universities do not
15 charge any fee or profit.
16 We bring various types of proposals to you for
17 approval. Some involve field work, or non-automotive
18 laboratory testing, such as chemical testing, and some are
19 paper studies involving no testing or field work.
20 For these studies, the indirect cost rates range
21 from 100 percent to 170 percent. As the slide shows, studies
22 that involve automotive testing can have higher indirect
23 costs as high as 210 percent.
24 As I mentioned earlier, automotive testing
25 laboratories require large investments in capital because of
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1 the equipment, therefore, justifying higher indirect cost
2 rates.
3 Once studies are under way, we track the progress
4 and cost of each research contract. Our contracts provide
5 for regular reimbursement as contractors report progress on
6 their work.
7 Staff do not authorize reimbursement until we are
8 satisfied that the project progress is on track to provide us
9 with the needed product in a timely manner.
10 Of the 19 recommended new projects in the Research
11 Plan described by Mr. Propper, we anticipate that 8 would be
12 paper studies, 9 would involve field work, or laboratory
13 testing, and 2 would involve automotive testing.
14 Prospective contractors will be asked if the rates
15 used by them have been approved by a Federal Auditing Agency
16 and if they are using the approved or lower rates.
17 If the prospective contractor does not have
18 Federally approved rates because they do not deal with the
19 Federal Government, or are too small, we review their
20 proposals rates very carefully.
21 In summary, we are very sensitive to the budget
22 details regarding all of our research studies. We require
23 our contractors to use Federally approved, or lower rates for
24 our studies.
25 This completes my presentation. I will be happy to
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1 answer any questions you may have.
2 Thank you.
3 CHAIRMAN DUNLAP: Dr. Holmes or Mr. Kenny, anything
4 else to add to this?
5 DR. HOLMES: No, unless there are questions, Mr.
6 Chairman.
7 CHAIRMAN DUNLAP: Okay. Very good.
8 One thing, it is something that this Board has
9 stressed, we want to have proper administrative processes
10 that look out for the limited resources that we have to do
11 Extramural Research.
12 I know that it is a fairly detailed presentation,
13 but it is an important one for us to have, so we have
14 confidence in our staff that they have heard the message that
15 they have to safeguard these funds.
16 I appreciate in particular Ms. Parsley's
17 presentation about how careful one has to navigate the
18 administrative process, not just to get good value for the
19 State, but making sure that we do it right, that it is not
20 contested, that we do it in an aboveboard, predictable
21 fashion.
22 I am confident that staff is moving in that
23 direction. I also appreciated very much the whole package
24 that we have before us today, the presentation from the
25 Research Screening Committee, the brief comments by Dr. Cota
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1 and others.
2 For my part, my colleagues on the Board, I feel
3 comfortable with what this represents. I hope that you do,
4 too.
5 If you have any questions, now would be a good time
6 to ask them.
7 If not, we will get on to the research item that we
8 have, and then we will go to the most important item of the
9 morning, which would be lunch, for some of us.
10 Any questions of staff on the process?
11 Dr. Friedman, I know that you and Supervisor
12 Roberts have spent a lot of time, particularly in the last
13 several months, taking a look at the process.
14 Are you feeling pretty good about this?
15 DR. FRIEDMAN: I really do, and I really appreciate
16 the many hours responding to my questions from Manjit and
17 John.
18 It has helped me. I am not quite finished yet, but
19 great progress was made.
20 This was really very helpful, the presentation.
21 CHAIRMAN DUNLAP: Good deal.
22 He is still looking for health effects research to
23 be the number one priority probably. You know that. I
24 warned you.
25 DR. FRIEDMAN: It doesn't have to be number one,
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1 but it has to be there.
2 CHAIRMAN DUNLAP: Right, absolutely.
3 Rob, very good.
4 We have no witnesses signed up on this.
5 Any written comments?
6 DR. HOLMES: No one signed up, and we have no
7 written comments.
8 CHAIRMAN DUNLAP: Very good. We have before us a
9 Resolution, 97-35, which contains a staff recommendation.
10 The Chair would entertain a motion and second to
11 move.
12 Very good. Dr. Friedman made the motion, and Ms.
13 Riordan seconded the motion.
14 Any discussions?
15 Very good. We will do a voice vote.
16 All those in favor of Resolution 97-35, say aye.
17 Any opposed?
18 Very good. Motion carries.
19 We have one a brief research item before us. Have
20 all Members of the Board had the opportunity to review the
21 proposal before us?
22 Any additional concerns or comments by Members of
23 the Board?
24 Okay. Dr. Holmes, take just one minute to give us
25 a quick summary of this item, very brief, and I think we are
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1 prepared to move this item.
2 DR. HOLMES: There is concern on the part of the
3 Toxics Program people about hydro carbons that are called
4 PAHs and certain other ones called dioxins and benzodifuride
5 and stuff.
6 This proposal from UC Davis would provide for a
7 quick and relatively inexpensive analysis for the compounds
8 and help us a great deal as far as number of samples that we
9 can deal with over the course of a year in our Toxics Hot
10 Spot Program, we recommend your consideration and approval of
11 Resolution 97-36.
12 CHAIRMAN DUNLAP: Relevant to that is that it is a
13 15-month project.
14 The budget total is under $30,000.
15 DR. FRIEDMAN: This is a simple proposal, and we
16 should approve.
17 CHAIRMAN DUNLAP: I take that in the form of a
18 motion, and it's been seconded by Mr. Calhoun in support of
19 Resolution 97-36.
20 Any further discussion on this item?
21 Okay. Very good. We will proceed with a voice
22 vote on this item.
23 All those in favor, say aye.
24 Any opposed?
25 Very good. The motion carries.
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1 Thank you.
2 Dr. Holmes, thank you. Thank you to our colleagues
3 on the Research Screening Committee.
4 We appreciate the time and effort that you put in
5 on our behalf. It gives us a great deal of confidence that
6 you have had the chance to touch and examine these proposals,
7 and I am continually getting very positive reports from our
8 staff, and you have a winning committee there in that you are
9 tough minded and focused, and we are grateful for the
10 leadership that you provide us.
11 Dr. Holmes, thank you.
12 Thank you, Ms. Parsley. I appreciate the views
13 that you have shared with us today.
14 With that, why don't we reconvene, take a lunch
15 break and reconvene about 12:45 or so, a little under an
16 hour.
17 We will come back here, and we will take the last
18 item.
19 Very good. Thank you.
20 (Thereupon the lunch recess was taken.)
21
22
23
24
25
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1 A F T E R N O O N S E S S I O N
2 --o0o--
3 CHAIRMAN DUNLAP: The next item on the Agenda is
4 97-6-4, a Public Hearing to Consider Adoption of Proposed
5 Amendments to the California Consumer Products regulation.
6 This item is to propose mid-term measures
7 regulation to reduce volatile organic compounds, or VOC,
8 emissions from consumer products.
9 This is a major regulatory item and is the new
10 consumer product measure to be considered by the Board under
11 our approved State Implementation Plan to attain the Federal
12 Ambient Air Quality Standard for ozone.
13 These mid-term measures would be added to the
14 existing consumer product regulations that are designed to
15 achieve a 50 percent reduction in emissions from the
16 categories under consideration today.
17 I understand that staff has worked diligently and
18 cooperatively with the affected industry and has gone to
19 great lengths to ensure that the proposed VOC standards are
20 technologically and commercially feasible.
21 I should mention, too, that I appreciate the
22 patience of those that have come great distances to be here
23 today.
24 I know that sometimes we forget that. I appreciate
25 your patience in waiting.
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1 It is my hope in light of the number of people, we
2 have some 20 people that have signed up to testify as
3 witnesses for our Board today, it is my hope that most you
4 that have commonality in your issues, if you would
5 communicate with one another and perhaps even condense, or
6 provide an abridged version of your comments to the Board,
7 particularly for those who have provided written comments.
8 With that, I would like to ask Executive Officer
9 Mike Kenny to introduce the item and begin his staff's
10 presentation.
11 MR. KENNY: Thank you, Mr. Chairman and Members of
12 the Board.
13 I have a brief introduction of this item, but
14 before that I would like to direct the Board Members to the
15 tables behind them, and on both of those tables are a display
16 of a number of consumer products for which we are proposing
17 VOC standards.
18 We have examples of products that currently comply
19 with the proposed standards and products that require
20 reformulation to meet the proposed standards.
21 Staff is proposing VOC standards for 18 previously
22 unregulated consumer product categories. I would like to
23 thank the staff who are going to be shown on a slide at the
24 end of my comments, and the main reason for that is that the
25 staff that have been working on this are actually quite
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1 numerous in number, and they have been involved in a very
2 extensive campaign with the industry to really work out the
3 details of this particular proposal.
4 As you can see from the number of categories that
5 are going to be presented to you today, and a number of
6 categories that we have done in the past, it really is an
7 extensive outreach program on their behalf, and there they
8 are.
9 This is really the group from the Stationary Source
10 Division and other Divisions in the Air Resources Board that
11 have worked very extensively on this particular product.
12 Before I turn the hearing over to the staff to
13 present the proposed mid-term measures, I would like to
14 briefly describe the Consumer Product Element SIP and the
15 milestones that need to be achieved.
16 The Consumer Product SIP Element is divided into
17 near, mid and long-term measures. The near-term measures
18 have already been adopted by the Board and include the
19 antiperspirant and deodorant regulations, the first two
20 phases of the Consumer Product regulation.
21 It also includes the Alternative Control Plan and
22 the Aerosol Coating regulation. In combination, these
23 regulations will achieve a 30 percent reduction in VOC
24 emissions from the 1990 consumer products inventory.
25 In the SIP, our mid-term measures commitment is to
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1 achieve an additional 25 percent reduction in VOC emissions
2 from the 1990 consumer products inventory.
3 In addition, the long-term measures commitment is
4 to achieve an additional 30 percent reduction in VOC
5 emissions by 2010.
6 Overall, our goal is to reduce VOC emissions from
7 consumer products by 85 percent. Before turning the meeting
8 over to staff, I want to reiterate what Chairman Dunlap said
9 regarding the extensive outreach staff has had with industry
10 stakeholders.
11 Staff has held seven public workshops in developing
12 this proposal and has had numerous meetings with industry
13 associations and individual companies.
14 Because some of our proposed standards are more
15 challenging than others and affect smaller businesses, we
16 propose longer lead times before these standards would become
17 effective.
18 This proposal represents a cooperative effort which
19 we believe is fair, technologically and commercially feasible
20 and partially fullfills our SIP commitment.
21 That said, I call upon Ms. Lisa Kasper, from our
22 Stationary Source Division, to present her proposed
23 amendments to the Consumer Product Regulation.
24 MS. KASPER: Thank you, Mr. Kenny, good afternoon,
25 Chairman Dunlap and Members of the Board.
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1 As Mr. Kenny mentioned, today we are proposing for
2 your consideration the mid-term measures, or Phase 3
3 Amendments, to California's Consumer Products regulation.
4 I will begin our presentation with a brief
5 background on the Consumer Products Program. I will then
6 discuss our proposed Phase 3 Amendments, also referred to as
7 the mid-term measures.
8 This will be followed by a description of staff's
9 proposed changes and how our proposal fits into our SIP
10 commitment.
11 I will then go through a description of the few
12 remaining issues, and finally I will end our presentation
13 with our future activities and our recommendation.
14 As you may remember from past presentations,
15 consumer products are defined in the California Clean Air Act
16 as chemically formulated products used by households and
17 institutional consumers.
18 This category includes items used by all of us in
19 our homes, schools and offices. For example, household
20 cleaners, personal care products and automotive products.
21 These products often contain solvents and
22 propellants which are volatile organic compounds, or VOC's.
23 The combined use of consumer products by over 30
24 million people in California has resulted in 265 tons per day
25 of VOC emissions in 1990.
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1 To date, we have adopted Consumer Product
2 regulations that will reduce these emissions by 30 percent,
3 or 80 tons per day, by the year 2000.
4 Because of the distribution from consumer products
5 to Statewide VOC emissions, the ARB was granted the authority
6 to regulate them by the California Clean Air Act of 1988.
7 As detailed in this slide, State law specifies that
8 Consumer Product regulations must achieve the maximum
9 feasible VOC reductions, be technologically and commercially
10 feasible, be based on adequate data and preserve product
11 forms, such as aerosols or liquids.
12 To date, as you can see in this slide, the ARB has
13 taken many steps to comply with this mandate, beginning in
14 1989.
15 Additionally, the Federal SIP for ozone that the
16 Board adopted in November 1994, included a consumer products
17 element.
18 This element is the key component of the SIP and is
19 needed to meet the Federal Ozone Air Quality Standards.
20 The Consumer Product SIP Element is a multifaceted
21 program comprised of near-term, mid-term and long-term
22 measures, which are targeted to achieve an overall 85 percent
23 reduction in VOC emissions between 1990 and 2010.
24 The mid-term measures which you are considering
25 today is the next component towards achieving this
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1 commitment.
2 Later in my presentation, I will discuss in more
3 detail how our proposal fits that the commitment. Now I will
4 discuss our proposed mid-term measures.
5 First, I will go through the mid-term measures
6 proposal that was in the staff report. However, since the
7 staff report was released, we have continued to work with
8 industry to try and reach consensus on the remaining issues.
9 As result of this on-going effort, we are proposing
10 some changes which I will describe in more detail after I go
11 through our original proposal.
12 The mid-term measures would add 29 standards for 18
13 new categories to the existing Consumer Products regulation.
14 The effective dates for the proposed standards are
15 from the year 2000 to 2005. The later effective dates are
16 proposed for standards which present greater reformulation
17 challenges and will give small businesses more time to
18 develop complying products.
19 The proposed amendments also add new definitions
20 for the categories and recording requirements to track the
21 use of methylene chloride and perchloroethylene, which are
22 toxic air contaminants.
23 Also, the existing provisions in the Consumer
24 Products regulation, such as the Alternative Control Plan,
25 the Innovative Products Provisions and the Variance
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1 Provisions will apply to the mid-term measures categories to
2 provide more flexibility for meeting the standards.
3 Now I will go through the process that we used to
4 develop the mid-term measures.
5 The proposed amendments were developed with
6 extensive public participation. In developing the mid-term
7 measures, we worked closely with the Mid-term Measures
8 Subgroup of the Consumer Products Working Group.
9 The formation of the Consumer Products Working
10 Group, which includes representatives from the consumer
11 products industry and the Air Resources Board, fulfilled one
12 of our SIP commitments.
13 Our first step in developing the mid-term measures
14 was conduct a survey of unregulated consumer product
15 categories that had the greatest potential for emission
16 reductions.
17 For maximum coverage of the consumer products
18 market, we called over 1700 companies to determine if they
19 needed to submit a survey.
20 After compiling the survey results, we determined
21 which product categories warranted further investigation.
22 Finally, we held seven public workshops and nearly
23 100 individual meetings, conference calls and video
24 conferences with the affected industry to identify the 18
25 categories for which we are proposing the VOC standards
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1 today.
2 These 18 categories are shown on the next slide.
3 As you can see in the slide, the product categories under
4 consideration include household, automotive, pesticide and
5 personal care products.
6 Californian's purchase almost nine of these
7 products every year, which accounts for 32 tons per day of
8 VOC emissions.
9 Although each proposed standard is based on factors
10 unique to the individual categories, we followed some general
11 guiding principles to develop the proposed VOC limits.
12 First, we wanted to ensure that the proposed VOC
13 limits are technologically and commercially feasible. In
14 addition, we wanted to achieve the maximum feasible
15 reductions in VOC's as required by State law.
16 Complying market share in our survey results were
17 also considered, because it tells us to what degree complying
18 products are currently available and used in the
19 marketplace.
20 We also wanted to ensure that product forms, such
21 as liquids, gels and aerosols, would be maintained at the
22 proposed VOC limits.
23 Finally, we designed the limits to allow
24 manufacturers to reformulate their products without
25 increasing the use of toxic air contaminants, such as
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1 methylene chloride or perchloroethylene.
2 We also added annual reporting requirements to
3 track the use of these compounds and product reformulation.
4 If we find a significant increase in the use of
5 these compounds, the proposed standards will be
6 reconsidered.
7 Now I will go through each product category
8 individually. As I do this, you will see a picture of some
9 representative products in each category while I describe
10 their functions.
11 Next, I will describe the proposed VOC limits and
12 the client market-share for the standard. In general, most
13 manufacturers will meet the proposed VOC limits by switching
14 to water-based technologies, by using non-VOC solvents or by
15 using low-vapor pressure VOC solvents.
16 As I go through these categories, please remember
17 that our survey shows that in 1995 complying products were
18 sold in all 18 categories, except for the hardpaste wax form
19 of the Automotive Wax, Polish, Sealant or Glaze category.
20 This is the case, because a new complying product
21 entered the market after our survey was conducted.
22 You may also notice that the complying market
23 share for each category varies, as it did with the Phase 1
24 and the Phase 2 Consumer Products regulations.
25 This is because each category is unique and relies
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1 on different technologies for compliance.
2 I will begin with the Automotive Rubbing or
3 Polishing Compound category. These products are designed to
4 remove surface imperfections from painted surfaces of
5 automobiles.
6 We are proposing a 15 percent VOC limit for all
7 forms of these products, with 18 percent of the market
8 complying.
9 Next is the Automotive Wax, Polish, Sealant or
10 Glaze category. In general, these products are designed to
11 seal out moisture, increase gloss or enhance a motor
12 vehicle's painted surface.
13 We are proposing three VOC limits for these
14 products based on product form. First, instant detailers are
15 products intended for quick cleaning and removal of light
16 contaminants between regular washings.
17 We are proposing a three percent limit, with 47
18 percent of the market complying. The products included in
19 all other forms are primarily liquids and semi-solids.
20 We are proposing a 15 percent limit, with 39
21 percent of the market complying.
22 Finally, the hardpaste waxes, they are products
23 that contain no water and are solid at room temperature. Our
24 proposed VOC limit is 45 percent.
25 Because we are only aware of one complying product
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1 that was introduced after our survey was conducted, the
2 complying market-share for the hardpaste wax products is
3 currently unknown.
4 However, this complying product has a VOC content
5 well below the proposed standard, and we believe that with a
6 long lead time, manufacturers have time to develop new
7 solutions for meeting this limit.
8 Next, we have the Bug and Tar Remover category.
9 These products are designed to remove road-grime and insect
10 residues from painted surfaces without causing damage to the
11 finish.
12 We are proposing a 40 percent VOC limit for all
13 forms of these products, with 43 percent of the market
14 complying.
15 Next is the Carpet and Upholstery Cleaner
16 category. These products are typically designed to remove
17 dirt and stains from household rugs and automotive and
18 household carpeting and upholstery.
19 We are proposing three VOC limits for these
20 products, based on product form and whether the products are
21 dilutable or ready-to-use.
22 We are proposing a seven percent VOC limit for the
23 aerosol products, with 44 percent of the market complying.
24 We are also proposing a 0.1 percent limit for the
25 dilutable non-aerosol, with 45 percent of the market
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1 complying, and a two and a half percent limit for the
2 ready-to-use non-aerosols, with 71 percent of the market
3 complying.
4 There is a high complying market-share for the
5 proposed limit for non-aerosol ready-to-use products, because
6 a large percentage of the market currently has low VOC
7 products.
8 Next is the Floorwax Stripper category. These
9 products are intended to remove natural or synthetic
10 floorwaxes or polishes.
11 We are proposing a three percent VOC limit for the
12 non-aerosol products, with 69 percent of the market
13 complying.
14 Next is the General Purpose Degreaser category.
15 These products are designed to remove grease, grime, oil and
16 other oil-based contaminants from a variety of substrates.
17 We are proposing a 50 percent limit for the aerosol
18 products, with 5 percent of the market complying.
19 We are also proposing a 10 percent limit for the
20 non-aerosol product, and 98 percent of the market already
21 complies with this limit.
22 There is a high complying market share for the
23 non-aerosol standards, because there are lot of low VOC
24 products already available on the market.
25 Next, the Hair Shine category. These products
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1 include liquids, pump sprays, aerosols and gels and are
2 sprayed on to the hair to create a shine.
3 We are proposing a 55 percent limit for all product
4 forms in this category, with 13 percent of the market
5 complying.
6 This VOC limit is consistent with the Second Tier
7 hairspray limit, due to similarities in these products and
8 the reformulation technologies.
9 Next is the Heavy-duty Hand Cleaner and Soap
10 category. These are specialized cleaning products that are
11 designed to clean or remove difficult dirt and soils, such as
12 grease and tar from the hands.
13 In the staff report, we proposed a two-tiered
14 standard for this category. The first tier standard is 10
15 percent, and 58 percent of the market complying.
16 The second tier standard is 5 percent, with 12
17 percent of the market complying.
18 Next is the Metal Polish Cleanser category. These
19 products are designed to improve the appearance of finished
20 metals, metallic or metalized surfaces.
21 We are proposing a 30 percent standard, with 90
22 percent of the market complying. There is a high complying
23 market-share in this category, because most products already
24 have a relatively low VOC content.
25 Next is the multi-purpose lubricant category.
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1 These are products designed for general purpose lubrication
2 or for use in a wide variety of applications.
3 This is another category that we proposed a
4 two-tiered standard in the staff report. For the first tier
5 standard of 60 percent, with 11 percent of the market
6 complying, and the second tier limit of 45 percent, with 9
7 percent of the market complying.
8 The next product category is Non-selective
9 Terrestrial Herbicides. These are pesticide products
10 designed to kill all non-aquatic plants in the treated area.
11 We are proposing a three percent VOC limit, with 96
12 of the market complying. There is a high complying
13 market-share with this proposed standard, because there are a
14 lot of low VOC products already on the market.
15 Next we have the Paint Remover or Stripper Product
16 category. These products are used to remove paint, varnish,
17 old finishes or related coatings from various surfaces.
18 We proposed two-tiers for this category in the
19 staff report. The first tier standard is 65 percent, with 96
20 percent of the market complying, and the second tier standard
21 is 45 percent, with 38 percent of the market complying.
22 Next is the Penetrant category. These are
23 lubricant products primarily designed to loosen metal parts
24 that have bonded together due to rusting, oxidation or other
25 causes.
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1 As with the Multi-purpose Lubricant category, we
2 proposed a two-tiered limit for penetrants in the staff
3 report.
4 The proposed first tier standard is 60 percent,
5 with 53 percent of the market complying, and the second tier
6 standard is 45 percent, with 37 percent of the market
7 complying.
8 These proposed standards are the same as those for
9 Multi-purpose Lubricants, because of the overlap between the
10 two categories.
11 Next we have the Rubber and Vinyl Protectant
12 category. These are products designed to protect, preserve,
13 or renew vinyl and rubber.
14 We are proposing a 10 percent limit for the aerosol
15 products, with 16 percent of the market complying, and a
16 three percent limit for the non-aeresol products, and 87
17 percent of the market complying.
18 There is a high complying market-share for the
19 proposed non-aerosol standard percent, because many low VOC
20 products are already on the market.
21 Next we have the Silicon-based Multi-purpose
22 Lubricant category. These are lubricant products which
23 provide lubricity through the use of silicone compounds and
24 are designed for general purpose lubrication.
25 We are proposing a 60 percent limit for these
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1 products, and 17 percent of the market already complies.
2 The next product category is Spot Remover. These
3 products are designed to remove localized spots or stains on
4 cloth or fabric, such as carpet, upholstery and clothing,
5 which do not require subsequent laundering.
6 We are proposing a 25 percent limit for the aerosol
7 products, with 78 percent of the market complying, and an
8 eight percent limit for the non-aerosol products, which
9 primarily includes liquids, and 80 percent of the market
10 complies with this limit.
11 Again, there is a high complying market-share with
12 these proposed standards, because many low VOC products are
13 already on the market.
14 The next product category is Undercoatings. These
15 are products designed to protect the automobile undercarriage
16 from corrosion.
17 The proposed VOC limit for all forms of
18 undercoatings is 40 percent, with 12 percent of the market
19 complying.
20 Finally, the last category is Wasp and Hornet
21 Insecticides. These are pesticide products designed to kill
22 biting or stinging flying insects, such as wasps, hornets and
23 bees from a distance.
24 We are proposing a 40 percent limit, with 67
25 percent of the market complying.
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1 Now I will discuss staff's proposed changes to the
2 mid-term measures. As I mentioned earlier, we continue to
3 work extensively with industry following the release of the
4 staff report to try and resolve any remaining issues.
5 With the proposed changes, we will have 25 instead
6 of 29 standards proposed for the 18 categories. Some general
7 modifications that affect a number of product categories
8 include extending the January 1, 2000 effective date to
9 January 1, 2001.
10 This extension would not impact our SIP commitment
11 and would give small businesses more time to meet the earlier
12 standards.
13 We are also proposing to eliminate the first tier
14 of the four two-tiered standards. Removing the first tier
15 standards would allow manufacturers to reformulate once
16 instead of twice while preserving the emission reductions.
17 We also propose to eliminate the reporting
18 requirements for product categories with two-tiered standards
19 to minimize the administrative burden on the affected
20 industry.
21 Finally, we are proposing some other miscellaneous
22 changes for clarification purposes.
23 Now I will go through the changes that we are
24 proposing to the effective dates and the VOC standards for
25 specific categories.
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1 We are proposing to extend the effective dates of
2 the Metal Polish Cleanser and the Rubber and Vinyl Protectant
3 categories to give manufacturers additional time to address
4 reformulation challenges.
5 We are proposing to raise the VOC limits and extend
6 the effective date in the Automotive Rubbing or Polishing
7 Compound category. We are proposing to raise the limit so
8 that manufacturers can reformulate their products with a
9 sufficient amount of VOC's to work on the harder paint being
10 applied to cars in California in response to low VOC rules
11 for auto refinishing.
12 Also, the later effective date will give small
13 businesses more time to meet the standard.
14 As you can see in this slide, we eliminated the
15 first tier standard in the Heavy-duty Hand Cleaner or Soap
16 category and increased the second tier standard from 5 to 8
17 percent. With 8 percent, 15 percent of the market complies.
18 We raised the standard based on concerns about
19 potential allergic reactions.
20 We are proposing to eliminate the first tier
21 standard in the Multi-purpose Lubricant Category and to raise
22 the second tier standard from 45 to 50 percent. Raising the
23 limit for this category will discourage the use of toxic air
24 contaminants, such as methylene chloride.
25 We are proposing changes to the Penetrant category,
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1 similar to those proposed for the Multi-purpose Lubricant
2 category. This is due to their similar formulations and the
3 fact that they make overlapping claims on their labels.
4 Now I will discuss the emission benefits of the
5 mid-term measures. The total emissions from 18 product
6 categories being considered today is 32 tons per day.
7 The proposed mid-term measures would achieve a 16
8 ton per day, or about a 50 percent reduction in VOC emissions
9 from these categories.
10 Now I will discuss our economic impacts analysis.
11 It should be noted that this is the most extensive cost
12 analysis that we have ever conducted for a Consumer Products
13 regulation.
14 We estimated the cost effectiveness for each
15 standard individually and followed the methodology that we
16 used in conducting the Phase 1 and Phase 2 regulations and
17 Cal EPA guidelines for conducting a cost analysis for major
18 regulations.
19 I will begin with a brief description of the
20 process that we used to conduct the analysis followed by our
21 conclusions.
22 The cost effectiveness is one measure of a
23 regulation's efficiency in reducing a given amount of
24 pollutant and is often reported in dollars to be spent per
25 pound of VOC reduced.
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1 Our analysis considered the impacts on the cost
2 effectiveness from non-recurring or fixed costs and from
3 recurring costs.
4 To determine the recurring costs, which are
5 primarily changes in raw material ingredients, we relied on
6 specific formulation data from the ARB mid-term measures
7 survey, industry journals and literature, and discussions
8 with industry representatives.
9 To determine the non-recurring costs, which
10 includes research and development, product and consumer
11 testing, and equipment purchases and modifications, we used
12 cost estimates for the existing ARB Consumer Products
13 regulations, because it was the best data available.
14 As seen in this slide, using staff's proposed
15 changes, we estimated that the cost effectiveness of the
16 mid-term measures ranges from essentially no-cost to about
17 $4.70 per pound of VOC reduced, with an average cost
18 effectiveness of 25 cents per pound of VOC reduced.
19 We estimated the increased cost to manufacture a
20 single unit ranges from no-cost to 60 cents per unit, with an
21 with average increase of about 8 cents per unit.
22 Based on our analysis, we found that mid-term
23 measures are cost effective, similar to ARB regulations.
24 Now I will briefly discuss our mid-term measures
25 proposal as a component of the SIP. In the SIP we adopted a
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1 percentage reduction target for each component of the
2 Consumer Products Element.
3 The mid-term measures component was targeted to
4 produce a 25 percent reduction from the entire consumer
5 products inventory.
6 Based on what we knew at the time, this 25 percent
7 reduction was estimated to produce a VOC reduction of 60 tons
8 per day.
9 The SIP was also based on the premises that the
10 reductions from the mid-term measures would be achieved from
11 previously unregulated categories and that the emissions from
12 these categories be reduced by 50 percent.
13 These were the reductions achieved in aggregate
14 from previously regulated categories. The portion of the
15 inventory attributed to unregulated categories was estimated
16 to be 120 tons per day.
17 As you can see in this slide, this meant that a 60
18 ton per day reduction would be achieved by a 50 percent
19 reduction from the uncontrolled categories.
20 Now I will discuss how what we are proposing to
21 date compares with the SIP. In order to meet our SIP
22 commitment relative to consumer products, our first goal is
23 to achieve the performance standard of a 50 percent reduction
24 from previously unregulated categories.
25 We recognize that the tonnage reduction achieved
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1 for meeting this performance standard was dependent on the
2 inventory and would change as our estimates of emissions
3 improved.
4 Since 1994 we have continued to investigate the
5 inventory as we develop the mid-term measures. Now I will
6 discuss what we found in this process.
7 As we were developing the mid-term measures, we
8 found that the actual VOC emissions from unregulated consumer
9 products are significantly lower than the 120 tons per day
10 estimated in 1994.
11 For instance, about 28 out of the 120 tons per day
12 are not consumer products at all, but are already regulated
13 by the districts or other State agencies, such as the
14 Department of Pesticides Regulation.
15 These emissions were double counted because they
16 were already included in other district or State
17 inventories.
18 Also, about 10 out of the estimated 120 tons per
19 day are VOC's which are discharged to sewer systems where
20 they are biodegraded.
21 In these cases, these VOC's should not have been
22 included in the 1994 inventory. Therefore, the 1990
23 emissions from unregulated categories of consumer products
24 are now estimated to be 82 tons per day.
25 Now I will discuss how the mid-term measures deal
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1 with the revised 82 tons per day of previously unregulated
2 VOC emissions.
3 When we studied the scores of categories that we
4 had not yet regulated, we found that the products could be
5 placed into three groups.
6 The first group consists of 18 product categories
7 included in today's proposal. These categories had the most
8 emission reduction potential in the available time frame.
9 Today's proposal will achieve a 16 ton per day, or
10 50 percent reduction, from the 32 tons per day from these
11 categories.
12 The second group consists of 13 categories emitting
13 30 tons per day. For these categories we found that more
14 time and research are needed before we can propose
15 standards.
16 These categories include health benefit products,
17 such as disinfectant that have legal requirements involving
18 the Department of Health Services that must be met before
19 they can be regulated.
20 The group also includes soap products for which
21 studies are being conducted to determine if the VOCs included
22 in soap products -- to determine if the VOC's discharged to
23 the sewer systems can biodegrade, and 100 percent solvent
24 products, such as paint thinner, that needs to be addressed
25 for the reactivity based standard.
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1 Finally, the third group consists of 20 tons per
2 day that are estimated from hundreds of miscellaneous
3 products, such as cat litter, eye liner, toothpaste and
4 prescription pharmaceuticals.
5 These either have low emission reduction potential
6 or have minimal use in California, such as windshield
7 de-icer.
8 This portion of the inventory may be overestimated
9 and will be evaluated when we update the entire consumer
10 products inventory.
11 We recognize that today's proposal does not deliver
12 all the emission benefits we will need for the SIP.
13 Therefore, we will need to do more.
14 First, we will continue to work on developing
15 standards for the 13 product categories that I mentioned
16 earlier, which will require more time and further
17 investigation.
18 We will also determine if a reactivity provision
19 for these categories provides viable options for
20 reformulation, as well as the use of low vapor pressure
21 solvents.
22 In addition, we plan to assess the 20 tons per day
23 from hundreds of miscellaneous categories to determine if the
24 emissions are overestimated and the emission reduction
25 potential from these categories.
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1 We will return to the Board to provide a status
2 report on our progress in these two areas within the next
3 calendar year.
4 Following the status report and prior to the year
5 2000, we intend to return to the Board with the next
6 installment of the mid-term measures.
7 Finally, we also plan to refine the entire consumer
8 products inventory when the SIP is updated for all source
9 categories.
10 Based on modeling analysis using the updated SIP
11 inventory, we will adjust the estimated tons of VOC's that
12 need to be reduced from consumer products as well as all
13 other source categories to obtain the Federal Ozone
14 Standard.
15 In summary, the mid-term measures partially
16 fulfills our SIP commitment. It focuses on previously
17 unregulated categories and achieves the anticipated 50
18 percent reduction from those categories it is possible to
19 regulate at this time.
20 Because some reductions are needed in 2002, but all
21 of them are not required until 2005, we still have time to
22 return to the Board with another mid-term regulation to
23 achieve the emission reductions necessary for meeting the
24 Federal Ozone Air Quality Standard.
25 Now I will go through some of the remaining issues
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1 along with staff's responses to these issues. I would like
2 to mention that out of the 25 standards being proposed to you
3 today, we currently have consensus with the major consumer
4 product associations on 18 of them.
5 Now I will discuss the remaining issues for these
6 categories. The first category with some remaining issues is
7 the automotive rubbing or polishing compound category.
8 Two manufacturers and CSMA are proposing a 20
9 percent limit, because they claim that it is not commercially
10 feasible to make a complying product.
11 We address these concerns by giving manufacturers
12 more time to comply with the standard and by raising the
13 standard from 15 to 17 percent.
14 We are also willing to form a working group with
15 industry and all interested parties to further evaluate the
16 concerns some manufacturers have with the proposed limit.
17 There is also an issue in the Automotive Wax,
18 Polish, Sealant or Glaze category. Some manufacturers and
19 industry associations are claiming that a higher VOC limit
20 should be established for premium products that are more
21 efficacious and are typically used by car care
22 professionals.
23 We want to continue working with manufacturers to
24 resolve this issue, and as with the previous category, we are
25 proposing to establish a working group with industry to
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1 explore developing standardized test methods to measure
2 product performance and, if appropriate, establish criteria
3 for premium products.
4 The next issue involves the Carpet and Upholstery
5 Cleaner category. A few automotive product manufacturers
6 claim that the carpet and upholstery cleaners used in
7 automobiles are unique products and, therefore, should be
8 excluded from this category.
9 We are not recommending this exemption, because
10 most carpet and upholstery cleaner labels specify both
11 household and automotive uses, and because 10 percent of the
12 automotive and non-aerosol market and 30 percent of the
13 automotive aerosol market already meets the proposed VOC
14 limit.
15 The next category with some remaining issues is the
16 Heavy-duty Hand Cleaner or Soap category. A few
17 manufacturers and CSMA are proposing a 15 percent limit as
18 opposed to our proposed 8 percent limit.
19 They claim that products that meet the VOC limit
20 are less efficacious because they take longer to work than
21 the non-complying products.
22 They also claim that all types of formulations are
23 needed to avoid possible allergic reactions. We addressed
24 these concerns about allergic reactions by raising the
25 standard from 5 to 8 percent.
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1 However, we do not believe a higher standard is
2 warranted because 15 percent of the market already meets the
3 8 percent standard, and staff found that the complying
4 products make the same claims for removing heavy greases as
5 the non-complying products, even though they may take a
6 little longer to use.
7 There is also an issue with the Non-aerosol Rubber
8 and Vinyl Protectant category. One manufacturer is claiming
9 that they make high-performance, or premium products, that
10 are superior to other rubber and vinyl protectants and should
11 be given a 65 percent VOC limit.
12 Staff does not believe a higher standard should be
13 set for these products, because 87 percent of the market
14 already complies with the proposed 3 percent standard, and
15 after reviewing the available data, we found it to be
16 inconclusive and insufficient to establish a higher VOC limit
17 for premium products.
18 We addressed these concerns by extending the
19 effective dates from 2000 to 2003 to provide a few extra
20 years to comply with the standard. This additional time
21 allows us to work with the manufacturer in doing technology
22 reviews.
23 The last category with an issue is Silicone-based
24 Multi-purpose Lubricant. A couple of manufacturers are
25 proposing a 75 percent limit, because they claim that it is
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1 not commercially feasible to meet our proposed limit due to
2 the expense of HFC 152A, a non-PFD aerosol propellant.
3 We do not believe that the higher limit is
4 warranted, because although HFC 152A is more expensive, there
5 are other options available for complying with the proposed
6 standard, such as water-based technology, which represents 9
7 percent of the market.
8 A few manufacturers are also claiming that the only
9 way to meet the standard is by using toxic air contaminants.
10 Staff believes that the 60 percent limit is set high enough
11 to give manufacturers alternatives to using toxic air
12 contaminants to comply.
13 However, the proposed reporting allows us to
14 monitor the use with the proposed standards.
15 Finally, the last issue involved, you will recall
16 that cost effectiveness is the ratio of annual costs to
17 annual VOC reductions. Industry has requested that we use
18 the total national cost divided by the California reductions
19 rather than our approach of using the national cost divided
20 by the National reductions.
21 We believe that our current methodology is
22 appropriate, and it is consistent with how we calculated
23 costs in the Phase 1 and Phase 2 products regulations that
24 were approved in 1989 and 1992.
25 Even when we use higher cost data submitted by
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1 CSMA, our analysis shows that the cost effectiveness of the
2 mid-term measures is comparable to other ARB regulations.
3 Now I will discuss some of the plans for future
4 activities regarding the mid-term measures and then end the
5 presentation with a brief summary and our recommendation.
6 In order to monitor industry's progress in
7 complying with the proposed standards, we will conduct
8 technology reviews for all of the VOC limits as their
9 effective dates approach.
10 Also, as I just mentioned, we will continue to work
11 with the affected automotive industry to try to develop
12 standardized test procedures for premium automotive
13 products.
14 As we proceed with these tasks, we will report our
15 findings back to the Board. We will also return to the Board
16 prior to 2000 with additional mid-term measures regulations
17 to achieve our SIP commitment.
18 In doing this, we will continue to investigate
19 reactivity as a means to provide flexibility and additional
20 formulation options.
21 Finally, we will also be working to update the
22 emissions inventory for all consumer product categories.
23 In summary, the standards for these categories were
24 developed with the extensive cooperation with the affected
25 industry through numerous meetings and workshops.
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1 All of the mid-term measure standards are
2 technologically and commercially feasible. Also, based on
3 our extensive cost analysis, the mid-term measures are cost
4 effective. Finally, this current mid-term measures proposal
5 is a positive step towards meeting our SIP commitment.
6 We recommend that you adopt the mid-term measures
7 with staffs proposed changes.
8 This concludes my presentation, and at this time we
9 will be happy to answer any of your questions.
10 CHAIRMAN DUNLAP: Thank you, Ms. Kasper.
11 I appreciate the presentation.
12 Mr. Kenny, if I might lead it off and ask a couple
13 of questions or overview questions.
14 One would be, Ms. Kasper indicated that there was
15 going to be some inventory updates. There was going to be
16 some other products that are going to emerge.
17 Can you give us a sense as to the timing of those?
18 MR. KENNY: With regard to the inventory, we will
19 begin the process, actually we have already begun the process
20 of trying to determine exactly what the inventory is with
21 regard to consumer products.
22 As we look at the 1994 SIP and the inventory that
23 was associated with that 1994 SIP and consumer products, we
24 do think that it needs to be modified, because we do think,
25 in fact, that it needs to be updated and corrected in a lot
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1 of ways.
2 In terms of the timing, as I have mentioned before
3 we had begun that, we think we will be completed with that
4 sometime in a couple of years.
5 We think that is also the timing when we will
6 probably be back to you with regard to the second part of
7 this mid-term control strategy.
8 CHAIRMAN DUNLAP: The next couple of years is not
9 good enough.
10 You are going to have to give us a time. We need a
11 time, some report back to us with a schedule. It is going to
12 be important for us to see.
13 I understand there are a lot of factors. There is
14 a lot of input that you are going to need to take in, et
15 cetera.
16 One last comment on my part before we hear from my
17 colleagues and everything and before we get to the witnesses,
18 this Board takes very seriously issues surrounding the
19 emissions inventory.
20 There have been examples in our State whereby there
21 have been changes made to inventories whereby there has been
22 a reaction from people out there, the stakeholders industry,
23 et cetera, and it is important, it is imperative that we are
24 extremely deliberate in any kind of change in emissions
25 inventory in that we have the right kind of conversations
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1 with the right kind of stakeholders and that we are
2 predictable in that process.
3 I do not want anybody to be able to assert that
4 this Board has engaged in an artful manipulation of the
5 numbers.
6 So, Mr. Kenny, I am kind of on you and your team to
7 make sure that we can show people the workup of those numbers
8 so that they are defensible, and you have done that in the
9 past. You have done it well.
10 I just want to make sure that we do not step in the
11 same trap that others have in the recent past.
12 MR. KENNY: We are very sensitive to that, and that
13 is why we wanted to be very straightforward today with regard
14 to what we see occurring with regard to the inventory and how
15 those changes in the inventory will affect what we are trying
16 to do in terms of complying with our SIP obligation.
17 And so as we go forward, we will maintain that
18 sensitivity.
19 CHAIRMAN DUNLAP: Okay. Good.
20 I do not mean to speak in code, for those of you in
21 the audience, but the inventory is extremely important as a
22 real motivator for us to strive to improve or reduce
23 emissions.
24 Any questions of staff before we get into the
25 witness list?
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1 We have some 20 people that have signed up to
2 testify. I have asked, I have been encouraged, I might add,
3 so I can't take the entire blame, but I am encouraged to use
4 the timer, which I am going to, and I will set it at five
5 minutes, and I have trust in our communications team that
6 they will be able to run the timer. I do not need to run it
7 up here.
8 Any comments before getting into the testimony?
9 Okay. I am going to call off a handful of names
10 and ask you to come to the front row or close to it so you
11 cue up, and I ask you to take the microphone quickly.
12 Mike, I do want to recognize, before we get into
13 the witnesses, that I appreciate the comprehensive nature of
14 the presentation. I think that you did a good job.
15 The way you illustrated the product categories and
16 focused on the changes, it was easy for us, I think, to get
17 our arms around the issues.
18 I would mention that I have more than nine such
19 purchases annually, I'm sure, in the Dunlap cabinet
20 underneath the sink.
21 All right. We will get into the witnesses.
22 Michael Thompson, from the Chemical Specialties Manufacturers
23 Association.
24 Catherine Beckley, Cosmetic Toiletry and Fragrance
25 Association.
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1 Paul Haluza, ACMC and MEMA.
2 Barry Meguiar.
3 Dennis Holloway, and Craig Burnett from Mother's
4 Polishes, and we have Gary Silvers, from Meguiars.
5 I see four witnesses from two companies. I'd
6 appreciate it if you would come up together and try to cover
7 your issues at once.
8 Robert Marchese, from Mark V, and Elsie Jordan,
9 from Eagle One.
10 Those are nine witnesses. I would ask you to come
11 forward.
12 Okay. We are going to do five minutes.
13 Before we do that, Mr. Schoning, I owe you an
14 apology. We always ask you to summarize before we hear from
15 the witnesses.
16 Excuse me for just a minute, those that I have
17 asked to come forward.
18 Would you take a moment. Ms. Kasper covered much
19 of the terrain, Jim, but I know that we need to hear from
20 you.
21 MR. SCHONING: No offense taken.
22 You can see that it is an extensive measure, and we
23 believe staff has responded with a commensurate level of
24 effort in its outreach.
25 Mr. Kenny touched already in his opening remarks on
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1 the nature of that. Let me just say that while you are
2 likely to hear from individuals today who disagree with the
3 proposal in terms of the product of this process, and perhaps
4 with the process itself, it would be impossible to identify
5 and include all of those millions of Californians who use,
6 manufacture and sell the products that are part of this
7 measure today.
8 Just as it is a significant and complex one, the
9 staff did an extensive effort to reach out, and we are
10 confident that they could not have done much more than they
11 did to reach out to the many parties involved.
12 CHAIRMAN DUNLAP: Thank you, Mr. Schoning.
13 Michael Thompson.
14 MR. THOMPSON: Good afternoon, Mr. Chairman and
15 Members of the Board. I will be very brief.
16 We have a written statement that has been entered
17 into the record. For the sake of time, I best describe my
18 organization as manufacturers of products in all 18
19 categories subject to regulation today.
20 We are here and have worked with the Board
21 cooperatively for several years. CSMA and the Consumer
22 Products Industry Coalition have worked continuously in the
23 two-year process with the CARB staff in the mid-term measures
24 and appreciate the good, cooperative effort on both sides of
25 the table that have gone into the development of this
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1 regulation.
2 There have been numerous meetings with the staff to
3 go through the intricacies and technologies upon the myriad
4 of types of different products on which this regulation is
5 based.
6 It has been our goal in these efforts to assist ARB
7 in developing standards that are efficient and contribute to
8 ozone attainment and meet all of the statutory requirements
9 under which consumer products are regulated by the ARB,
10 including ensuring that it is technologically and
11 commercially feasible, based on adequate data and don't
12 eliminate a product form.
13 We also assisted the ARB in meeting the
14 requirements concerning the costs and economic information
15 provided.
16 CSMA fully supports the staff's suggested
17 modifications to the original proposal. These revisions
18 illustrate the continued work which has gone on during the
19 45-day comment period.
20 Our written comments on the cost and assessments
21 and the economic impact analysis are just an example of where
22 we have agreed basically to disagree, as I can best describe
23 it. As noted by Ms. Kasper, we feel that the numbers should
24 be used for California only, whereas the staff has elected to
25 use these on a nationwide basis.
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1 I will not belabor that point. It is merely a
2 disagreement.
3 The cost estimates for our industry to reformulate
4 products are significant. Our estimates assume that these
5 limits will turn into the technologically and commercially
6 feasible products and all formulas will be successful.
7 We concur with the basic structure of the cost
8 estimates and would like to commend staff for their rigorous
9 efforts in this realm.
10 Due to the extraordinary time constraints today,
11 ARB staff and the industry, we are taking -- we find just a
12 few areas that have been illustrated earlier do need further
13 attention.
14 The limits for the auto wax and polish, in all of
15 the forms, don't allow high durability products to remain on
16 the market.
17 Since longer durability can decrease the frequency
18 these products need to be used, we believe that a higher VOC
19 limit for durable products can be justified without reducing
20 emissions.
21 Unfortunately no performance standard method now
22 exists that can distinguish between durable products and
23 others.
24 We plan to initiate a voluntary standard to develop
25 a project within CSMA to develop an industry consensus
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1 standard for the measure of durability of auto waxes and
2 polishes and capable of distinguishing durable products.
3 We encourage ARB to work with us after this
4 standard method is completed to establish a new sub-category
5 for durable products.
6 Further, we fully support the continued efforts and
7 workgroup that has been proposed today. Continued work will
8 be required in the down-the-drain area, as the staff has also
9 mentioned.
10 CSMA and other members will undertake the
11 aggressive challenge that faces us in this industry. We have
12 a long history of working with this staff and this Board, and
13 we have not always agreed 100 percent but have always agreed
14 to work cooperatively to ensure that the agency meets the
15 mandates of the California and Federal Acts.
16 Our Members were responsible for the development of
17 the first 27 along with these additional 18 categories.
18 I think that we should be proud of the innovative
19 provisions that are included and highlight those at this
20 point.
21 The use of creative provisions allow flexibility to
22 the industry while ensuring that true mandates are
23 continued.
24 We look forward to working with the staff to
25 develop flexible voluntary alternative for reactivity in
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1 1998. In addition we impress that the ACP and the innovative
2 products be made available to all consumer products.
3 I would be happy to see us in May, and I would like
4 to say that our Members accept the responsibility to do our
5 fair share of reducing VOC's from consumer products.
6 We do not take the challenge of this rule lightly
7 and ask that you work with us to ensure that the consumer
8 products marketplace is not damaged.
9 California jobs, employers and consumers must not
10 be overlooked as we all strive towards these environmental
11 goals. I look forward to working and continuing our good
12 working relationship on these and other issues.
13 I must digress for one second and add a little
14 humor to this, Chairman Dunlap.
15 I come from Washington, DC, and we have an
16 interesting news article that appeared in the Washington
17 Post. It is a slight spelling of your name, but the Virginia
18 Environmental Commissioner is D-u-n-l-o-p.
19 He was in the Washington Post article last week
20 opposing a new solution for clean air. That was Virginia
21 Governor George Allen's Environmental Sheet, D-u-n-l-o-p,
22 called upon the White House last night to shut down the
23 Federal Government after the third day in a row of high-level
24 of ozone. That is after opposing Virginia to meet ozone
25 attainment.
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1 CHAIRMAN DUNLAP: That is not my brother.
2 Thank you. I appreciate your comments in the
3 spirit in which your association offered them.
4 It is important, even though you may not always
5 agree, that the working relationship exists, and we are able
6 to thrive in a cooperative kind of communication and
7 environment. I appreciate that.
8 We may -- I would not stray too far, and I have a
9 feeling that you will not. We may want to talk to you later
10 as we get down to some of these issues to perhaps help us get
11 a grasp on summarizing them.
12 Catherine Beckley, Cosmetic, Toiletry and Fragrance
13 Association.
14 MS. BECKLEY: Good afternoon, Chairman Dunlap and
15 Members of the Board and ARB staff. My name is Catherine
16 Beckley, and I'm Assistant General Counsel for the Cosmetic,
17 Toiletry and Fragrance Association, or CTFA.
18 We are the National Trade Association for the
19 Personal Care Products Industry and represent over 550 member
20 companies that manufacture both finish products and also that
21 supply the ingredients and packaging for those products.
22 Today I would like to comment on the proposed
23 amendments to the California Consumer Product rules affecting
24 our products and members.
25 The consumer products slated for regulation in the
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1 proposed mid-term measures is the category called hair
2 shine.
3 Hair shines are a niche hair care product designed
4 primarily to impart a shine or sheen to the hair. Hair shine
5 delivery systems include both aerosol and pump dispensers.
6 The market for higher shine includes products for
7 the general or mass market, salon patrons and ethnic
8 consumers.
9 The proposed VOC limits for spray shine or hair
10 shines is 55 percent by the year 2005. CTFA manufacturers of
11 hair shines appreciate the decision of the ARB staff in
12 granting adequate time to reformulate these products.
13 ARB staff met with CFTA companies and ethnic
14 product companies to learn about the product category, and
15 staff recognized the adverse economic impact a 55 percent VOC
16 product with a premature compliance deadline could have had
17 on many small, family owned, ethnic product companies.
18 For many of these smaller companies, hair shines
19 comprised the bulk of their product line. Losing those
20 products because of an unrealistic compliance deadline could
21 have jeopardized their entire business.
22 In conclusion, the CTFA supports ARB's proposal for
23 hair shines and appreciates the staff's willingness to work
24 with affected companies.
25 Granted, the 55 percent VOC limit is
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1 technologically challenging, but the industry will work
2 toward the proposed reformulation by 2005.
3 Thank you very much.
4 CHAIRMAN DUNLAP: Very good. Thank you.
5 Any questions of the witness?
6 Very good.
7 Paul Haluza, ACMC and MEMA.
8 MR. HALUZA: Mr. Chairman and Members of the Board,
9 and very familiar faces that I think I know more than my own
10 family in the past two years on the staff.
11 My name is Paul Haluza, and I'm Vice President and
12 Government Relations on the Motor and Equipment Manufacturers
13 Association, or MEMA.
14 I am here today on behalf of the automotive
15 chemical manufacturers account, or ACMC, a product line group
16 of MEMA.
17 ACMC members produce a broad range of automotive
18 chemicals designed for improving vehicles, the chemical
19 products used in the performance and maintenance of
20 vehicles.
21 By the way, 9 of the 18 categories proposed in the
22 mid-term are automotive. We have submitted a lengthy written
23 statement for the record, but my role today is to introduce
24 or at least to lead a group of California manufacturers,
25 retailers and users of automotive exterior surface care
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1 products who have come here today to outline their issues
2 with proposed regulations for categories, 200 compounds out
3 and 210, Automotive Waxes, Sealants and Glaze.
4 I hope the Board will extend to each of these
5 speakers the courtesy of hearing their messages. Many of
6 them have never appeared in a public forum like this before,
7 and they are small businesses representing the heart of
8 California's economics.
9 I also ask that if the Board Members have any
10 specific technical questions that any of the witnesses
11 involved be allowed to come up and answer as they feel
12 comfortable to do so.
13 With that, I would like to make a few general
14 comments on behalf of ACMC. By the way we also did recommend
15 the 20 percent for rubbing compound along with the APAA, so,
16 just to correct the record.
17 The ACMC has been a participant in the Consumer
18 Products Working Group and have attended all of the public
19 hearings over the past two years, the workshops, and we have
20 conducted private meetings with CARB staff as well as
21 numerous conference calls, et cetera.
22 Additionally, the ACMC has organized many
23 individual meetings with CARB in an effort to provide the
24 technical education about the various automotive product
25 categories and the efficacy requirements demanded by
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1 customers of these products.
2 In addition to staff, affected ACMC member
3 manufacturers have traveled to Sacramento in order to
4 participate in both the formal workshops and individual
5 meetings.
6 As we approach the end of this lengthy and very
7 costly process, there are remaining differences between CARB
8 and CARB's proposed standards, and the needs of ACMC members
9 to continue to provide California residents with quality
10 products that meet their standards for performance.
11 ACMC and MEMA believe it is appropriate to
12 recognize the formidable task by the ARB staff that they face
13 in the preparation of this 300-page, plus Initial Statement
14 of Reasons.
15 We compliment staff on the depth and the extent of
16 the work that went into this report in order to assemble and
17 evaluate the vast amount of data supplied by ACMC and all of
18 the other business resources involved in the mid-term
19 measures.
20 ACMC also acknowledges the efforts of ARB staff and
21 our member manufacturers to reach agreement, many of the
22 automotive product categories, to this extent we support the
23 position of our many manufacturers.
24 Our written comments detail a continuing concern
25 with the economic assumptions made in support of the staff
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1 recommendations as well as ARB's interpretation of
2 technological and commercial feasibility, I guess that we
3 have agreed to disagree on that one.
4 We have continually emphasized to the staff that
5 the mid-term measures categories contain product categories
6 with a market basket of products that have equally wide
7 functionality requirements or serve very specific niche
8 markets, unlike Phases 1 and 2.
9 As such, any regulatory approach controlling VOC
10 emissions from these categories needs to recognize the
11 consumers preference and requirements of the products.
12 The risk of one-size-fits-all regulatory policy
13 applied in the mid-term measures is likely may lead to the
14 elimination of some product forms.
15 ACMC feels that the proposal before you today falls
16 short in several other categories other than waxes and
17 compounds, and we continue to seek an exemption on the
18 automotive upholstery cleaner, and we also support the
19 efforts of the manufacturers in the rubber and vinyl.
20 If time permits, I would just like to comment,
21 because we did hear a proposal today about the forming of a
22 workgroup. If I could go on record, ACMC is prepared to
23 support that working group, provided there are some
24 stipulated standards or criteria.
25 First of all, hardpaste wax was not identified. It
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1 was identified as a separate category, but it was not
2 identified as falling under the workgroups.
3 Perhaps it was meant to be, but we think that all
4 the products under 200 and 210 should be a part of the
5 working group.
6 CHAIRMAN DUNLAP: Apparently you have convinced the
7 staff that it is in.
8 MR. HALUZA: The first objective needs to be a
9 thorough review of the inventory of these products.
10 We also ask that the working group have a maximum
11 three-year time table, with progress reports to the Board
12 annually.
13 We would also ask that the working group must
14 involve all the effected companies, large and small, and the
15 respected trade associations.
16 The final objective would be to develop standards
17 that recognize the functional requirements of the products
18 combined into these categories.
19 I think with that, I will --
20 CHAIRMAN DUNLAP: Will staff -- why don't you keep
21 the list of the suggestions.
22 I did not see any enthusiastic head bobbing on the
23 last suggestion or so, but if you will just keep that, and as
24 we wrap this up, and at the tail-end of the testimony, we
25 will see if we can come back to this one.
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1 Okay. Paul, thank you. I appreciate the
2 suggestions about being kind to our witnesses. We will try
3 to do that today.
4 MS. EDGERTON: Just point of clarification, my
5 understanding was that Mr. Thompson had indicated that there
6 would be a working group within the Chemical Specialties
7 Manufacturers Association that would seek input and work with
8 our staff, but it would be their working group.
9 MR. AMES: My understanding, that Mike Thompson's
10 suggestion was that the Association work on a test, a
11 standard test for durability, and that test be the basis of
12 the working groups to proceed forward to explore the
13 opportunity for setting the separate standard for highly
14 durable products, and so that is part of the overall global
15 effort, would be developing a test method for durability.
16 CHAIRMAN DUNLAP: Well, not to make this any less
17 easy to understand, but we should have a discussion about
18 work groups and advisory committees, and who is for them and
19 who participates and all that.
20 I certainly would support Mr. Thompson's commentary
21 earlier about him perhaps having his own industry group and
22 his members would come in and participate as well and hear
23 from them and have an exchange of information.
24 So rather than us talk about what individual work
25 groups and advisory committees are created now, why don't we
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1 just come to that in the end, because I am sure that there
2 are going to be other representatives from associations that
3 we will hear from, and they might want in, too, and then we
4 will be back covering the same issue.
5 I would just rather cover it once at the tail-end,
6 if that is okay.
7 MR. KENNY: If I could make one quick comment.
8 I think basically, in direct response to Ms.
9 Edgerton's question, we would not just solely be a CSMA
10 workgroup. It would be broader than that.
11 MS. EDGERTON: The whole host of regulations that
12 apply to how it is managed, I just want to be aware that it
13 is controlled by State law of a different sort if one of our
14 working groups versus theirs.
15 I want it to be clear minded. I don't want to be
16 riding on their parade if it was theirs.
17 MR. HALUZA: My understanding is that the working
18 group would be actually organized under the auspices of ARB
19 staff.
20 CHAIRMAN DUNLAP: Yeah. Okay.
21 We will talk about it later.
22 Peter, perhaps you and Mr. Scheible can put your
23 heads together and figure out how to cover as much ground as
24 possible with these committees.
25 But I am mindful of the fact that the staff
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1 presentation covered, as well as Mr. Schnoning, covered a
2 whole lot of process, workgroups, teleconferences.
3 I seem to remember, and all of this, and I know we
4 did a lot of it, and it is our intent to continue to do
5 that.
6 Yes. Okay.
7 So, there is enough process to go around it seems.
8 Okay. Meguiar's. We have two Meguiar's witnesses,
9 Barry Meguiar and Gary Silvers.
10 Are both of you here? Why don't you come up
11 together?
12 Do you want to talk about two different products?
13 MR. MEGUAIR: We are talking about two different
14 issues.
15 I would like to talk, if I may, Mr. Chairman --
16 CHAIRMAN DUNLAP: You are trying to get ten minutes
17 out of me.
18 MR. MEGUIAR: Mr. Silvers is the Head of R and D
19 and would like to talk about the technical side.
20 I would like to talk as a manufacturer. I own the
21 company, and I would like to talk about the impact it would
22 have on us as a manufacturer.
23 CHAIRMAN DUNLAP: Okay.
24 Your name is on the product, as I understand.
25 MR. MEGUIAR: Yes, it is.
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1 I'm Barry Meguiar, and I'm President and CEO of
2 Meguiar's, Inc.. We are a family business, a California
3 business, if you will, making performance based car-care
4 products.
5 We sell our products to industry and to consumers
6 across the country, and literally around the world we have
7 subsidiary offices and companies.
8 We have dozens of products. There are three or
9 four up there. Yes.
10 We sell our products around the world, and they are
11 performance based. I might point out, if you would allow me,
12 that few family businesses transition to the second
13 generation. I think it is less than 20 percent.
14 We are 96 years old, a fourth generation company.
15 We are kind of proud of that. In fact, in four years, Lord
16 willing, we are going to be one of the few family businesses
17 in America to have ever celebrated a hundredth anniversary,
18 and that is kind of special.
19 We have done that without a lot of noise. You have
20 not seen a lot of advertising by us.
21 We do it by making great products. That is our
22 whole reason for existence.
23 I don't say that casually. We are used and
24 recommended by most of the car manufacturers and paint
25 suppliers around the world, for the Concours events, the fine
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1 car show events, the finest automobile museums, detailers and
2 bodyshops.
3 Wherever people are serious about maintaining their
4 car finishes and appreciating their condition, that is where
5 our products are predominantly used. We have earned the
6 respect of these various audiences, because our products
7 work.
8 My great concern is that the VOC limitations that
9 are being discussed here would take down that level of
10 performance in our products and causes us a great deal of
11 difficulty.
12 I must say that I applaud what you are doing. We
13 appreciate the process.
14 The people, the staff, everybody that we have
15 talked with have been open to what we have said. We have
16 been a little short on our information, because we are a
17 little unnerved about this February in there, so much more we
18 would like to say in person, but we are limited here, but we
19 do appreciate the process.
20 Let me quickly just tell you a little bit about
21 what is going on in the consumer car wax category. It is a
22 confused category.
23 If you have ever seen anybody stand in front of a
24 car wax wall, they are confused. They don't know what to
25 use.
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1 Most of the noise in the category is related to
2 promotional type products. The advertising that you hear,
3 all of the things on radio and television, they are
4 overwhelming product claims.
5 These are promotional products. They rely on
6 promotion, and you have probably noticed that they are here
7 today and gone tomorrow. They come and go, and they come and
8 go, and they are lighting rods of fire with repellent laser
9 beams and promising lifetime protection, all of these
10 unbelievable things.
11 There are a lot of us here today that have
12 companies that manufacture performance oriented products. In
13 other words, our whole reason for being is our products
14 really genuinely work.
15 We cannot compete with all of the noise and the
16 advertising, but we have a loyal following.
17 Meguiar's Car Wax is the number one product in the
18 car wax category, brand loading. That did not happen by
19 anything except that our products really work.
20 Let me give you a great example. Our number one
21 selling product, we are not even advertising this year. It
22 is way up in sales again this year, and its formulation was
23 created in 1973. Same now as it was then.
24 That is not hype. That is performance. That is
25 product that creates great results. It means quality.
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1 There are a number of manufacturers here today that
2 have those kinds of products, and there is a real
3 differentiation between those types of products.
4 The problem that we have is that the regulations
5 that are being suggested would literally bring the
6 performance of our products down to the level of these
7 promotional products.
8 That would happen literally, and we would have no
9 point of differentiation. We would be out of business.
10 I must say that the audiences that we sell to would
11 be in turmoil. It is a serious thing.
12 The low VOC, high solvent paints are another part
13 of the puzzle. I am happy to tell you that these paints are
14 working well.
15 I think that you did a real positive thing not just
16 for the environment but for the industry. These paints are
17 much more durable. They're wonderful, and I particularly
18 like them, because they dramatically show a greater
19 difference between promotional product performance and
20 performance-based products performance.
21 I mean you can really see the difference.
22 But we are using them because our products work.
23 One of the reasons is that we have polishing oils that
24 cushion the surface.
25 When you have abrasives in the product, if you
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1 reduce those VOC's, the polishing oils, you scar the finish,
2 and the drawback of these new paint finishes is that they are
3 abrasion sensitive. They scratch very easily.
4 In fact, the number one complaint among consumers
5 today is swirl marks.
6 We hear it constantly. That is the tip of the
7 iceberg of what will happen if we cannot find a way to solve
8 that problem some other way than what we have.
9 We absolutely scratch our heads. We can't figure
10 out how to do it. You have to lubricate the finish, and we
11 cannot find anything other than polishing oils, and these are
12 the very VOC's you are telling us that we cannot use at
13 meaningful levels, if you will.
14 We are a bit in the middle here. We are addressing
15 the low VOC paints that have been regulated into existence,
16 but now the way that we solve that problem is being perhaps
17 taken from us through more regulations.
18 CHAIRMAN DUNLAP: May I ask a question on that?
19 You indicated that one of your products is the same
20 recipe that you have had for 25 years.
21 Can you say a word about your small company and
22 what you do for R and D for the next generation of product?
23 You have some that seem to be highly specialized, probably
24 newer.
25 How do you think up or develop or make a new
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1 recipe?
2 How do you do that?
3 MR. MEGUIAR: Well, our Head of R and D is coming
4 up, but let me tell you that through the years we have been
5 environmentally minded, and we have carefully avoided toxic
6 and other types of dangerous materials.
7 We are one of the safest products on the market.
8 We pride ourselves, and we are unsure of what you are talking
9 about here.
10 The way we develop products is right on the
11 surface. We work and work and work until we know our product
12 is better than any other product on the market.
13 We have never been known, anybody that knows us
14 knows that we are not well-known for grinding on finishes.
15 Our reason for fame is creating a perfect showcar
16 finish, and we do that with polishing oils, very much the
17 essence of what we are doing and some of those fall under
18 this category that we are dealing with here, and that's our
19 problem.
20 We have some products, some are in the top 12
21 products, two or three of those, my Grandfather formulated
22 back in the twenties.
23 On the other hand, we have several products in that
24 category that have just come out in the last few years. We
25 have a couple that just came out in the last year, and all of
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1 the products that we have been perfecting over the last ten
2 years, we have very carefully looked at this VOC issue, so we
3 are in concert with where you are going.
4 But it is not a new issue now. We didn't just get
5 environmentally conscious because of this news that we
6 received these last few months. We have been working on it
7 for a long time.
8 That is why we have fairly deep convictions that
9 this is a serious challenge that you are putting on our
10 doorstep that we do not know if we can meet, and if we can't
11 meet, we will be out of business.
12 CHAIRMAN DUNLAP: You are concerned about it being
13 so disruptive that the distinguishing characteristics between
14 your product and others will be lost?
15 MR. MEGUIAR: And the consumer will be the one that
16 really loses.
17 That is the problem. We are happy that there is
18 some ongoing dialogue on this.
19 Again, we appreciate the dialogue and the intent
20 here for the truth, and we will work with you hand in hand,
21 but just understand that there is a potential for putting us
22 out of business.
23 That is not your intent, I know that, but here in
24 my heart, as God is my witness, that is my great fear that it
25 will happen if we hold these VOC requirements in the
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1 long-term.
2 CHAIRMAN DUNLAP: Before you take off, Mr. Silva
3 and then Mr. Calhoun have a question.
4 SUPERVISOR SILVA: In Southern California, we have
5 several marinas, and there is a lot of polishing that goes on
6 on the boats, that is fiberglass polish, and I always thought
7 that they were kind of the same, but they are not.
8 The polishing oils go in a fiberglass polish,
9 also?
10 MR. MEGUIAR: We have several formulations for
11 fiberglass.
12 You are dealing with gelcoat, and we have been
13 careful in our boatwashes to be sure that they are
14 biodegradable, because they will get into the water.
15 The formulations themselves vary, and some of the
16 basic ingredients are the same, and then we vary them
17 depending on if it is going on gelcoat or whatever type of
18 surface it happens to be going on.
19 CHAIRMAN DUNLAP: How large is your firm?
20 MR. MEGUIAR: About 100 employees.
21 CHAIRMAN DUNLAP: Okay.
22 MS. EDGERTON: I appreciate very much your positive
23 attitude about protecting the environment and appreciating
24 what we have done.
25 When I was being briefed by the staff earlier, I
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1 recall that they mentioned that several of the companies had
2 their filler come from out of State.
3 What percentage of your filler comes from out of
4 State?
5 MR. MEGUIAR: I'm not quite sure.
6 We manufacture our own products in Tennessee.
7 MS. EDGERTON: I lived in Tennessee.
8 MR. MEGUIAR: We are in Nashville.
9 MS. EDGERTON: I was born there.
10 MR. MEGUIAR: The State of Tennessee tried hard to
11 get us to move our corporate headquarters there, taxwise it
12 would have been a smart thing.
13 We are Californians. We are not leaving, no matter
14 what you regulate.
15 MS. EDGERTON: The hundred employees, they are
16 really in Tennessee?
17 MR. MEGUIAR: No.
18 About 40 of them are in Tennessee, and 60 of them
19 are in California.
20 MS. EDGERTON: So, we are partners, Tennessee and
21 California.
22 MR. MEGUIAR: We are dyed in the wool
23 Californian's.
24 We are going to stay here.
25 MS. EDGERTON: That is great.
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1 It is unusual not to have to advertise.
2 MR. MEGUIAR: Yes, it is.
3 Normally, a product life that goes down and you
4 have to have another product. To have products that stay
5 around, and I am telling you the truth, we have 3 products in
6 our top 12 sellers today that my Grandfather formulated in
7 the 1930's.
8 That would help you understand the trepidation I
9 feel when I know that these products that we have relied on
10 for four generations of our family, that we would not be able
11 to produce any longer.
12 It is a frightening thought, and I'm trying to stay
13 calm about it, and I know that you are working with us. I am
14 just trying to help you understand that not all polishes are
15 created the same.
16 The promotional polish, it is not so critical
17 because, quite frankly, what they say on TV, and what goes
18 into their formulations, they are not exactly the same
19 thing.
20 We live and die by what our products do on the
21 finishes, and if we cannot do that anymore, we are literally
22 out of business. We cannot compete with those.
23 MS. EDGERTON: I have one more question.
24 I notice, because I look at these lists, and I'm
25 like the Chairman, I suppose all of us are, we have lots of
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1 these products under the sink and elsewhere, and I apologize
2 to you, Turtle Wax is what I have, and my car doesn't look
3 really too good.
4 MR. MEGUIAR: She said that. I didn't.
5 CHAIRMAN DUNLAP: Make sure there is a lot of
6 chuckling and good spirit and meant in jest.
7 MS. EDGERTON: I said that maybe it could be
8 better.
9 I didn't say it definitely didn't. It does look
10 good.
11 MR. MEGUIAR: I can tell you that --
12 MS. EDGERTON: There is a complying product.
13 If they can do it, why can't you?
14 MR. MEGUIAR: Well, I can only tell you, I would
15 not like to get into talking about individual competitors,
16 because I have an awful lot of friends in some of these
17 companies.
18 MS. EDGERTON: I'm sure you have a lot of friends.
19 MR. MEGUIAR: If you would investigate where our
20 products are used at the high levels, you would understand
21 that there is substantial difference between our products and
22 other manufacturers, and quite frankly, there are some other
23 manufacturers that fall into that category, that have very
24 high performance based products and do a very good job in
25 that area.
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1 A few of us, the smaller companies will really get
2 hurt in this thing.
3 CHAIRMAN DUNLAP: Understood. Can we hear from
4 your R and D man?
5 Thank you.
6 MR. SILVERS: My boss has far exceeded the five
7 minutes, so that is my speech.
8 Thank you.
9 But what I would like to say is that I am the
10 chemist for Meguiars, and being such, I know how difficult it
11 is to try to regulate the VOC's and try to get products that
12 can remain in their original forms to be utilized by
13 customers that expect a certain kind of benefit from their
14 products.
15 It is a difficult task. I want to just mention or
16 at least bring to the Board's attention that in a particular
17 product, such as a liquid wax that is grouped together with
18 sealants and glazes and aerosol products and solids and
19 liquids, that this group is kind of large.
20 It really needs some form of separating, which I am
21 really happy to hear that we are going to work in an
22 environment that we can resolve or correct some of these
23 groupings that take away from them.
24 Liquid wax has certain technological requirements
25 that I would like to prepare a statement here so I have it on
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1 record that it has to develop a film structure that can only
2 be controlled with the use of VOC ingredients.
3 Studies have shown that VOC components of a liquid
4 wax are responsible for permitting the various polymers in
5 waxes to adequately bond at the appropriate reaction rate to
6 yield the best film integrity.
7 In order to make or maintain performance in hot
8 climates and cool climates, you really need VOC materials,
9 because they evaporate at a certain predicted rate that if
10 you have the VOC's or you don't have the VOC's in the
11 products and replace it with water or you replace it with low
12 the volatile materials, the LVP's, what you get is a slowing
13 down of evaporation rate, and you also get some of these
14 polymers.
15 They don't really complex -- they actually form a
16 poor network. So the durability becomes in jeopardy as well
17 as there are streaks and smudges, and you see a poor quality
18 product.
19 What we would like to do is we would like to
20 develop, if we can, some kind of community standard to show
21 the difference between a liquid wax that has a proper amount
22 of VOC versus the glazes and the sealants which do not
23 require a high VOC level, and you will have more durability
24 from a liquid wax with the proper VOC than you would by
25 regulating down to 15 percent.
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1 That is what I want to say about the liquid waxes,
2 and I'm very happy to hear that you moved ahead on the
3 compounds.
4 We feel that we are not exactly there 100 percent.
5 We would like to see 20 percent, 20 percent is still
6 something that we would have to work and develop some R and D
7 time to make a better product, but 20 percent would be a
8 reasonable amount.
9 As far as paste wax is concerned, we feel that
10 reducing the paste wax below 65 percent would kill the
11 product form.
12 If you have any questions, I would certainly -- I
13 just want to thank everybody for all of the help.
14 We have been involved since February, and since
15 that time they have brought us right up to speed, and they
16 have always had their phones and their ears always listening
17 to what we wanted.
18 We felt that just being here today and having all
19 of you here is a great help. So, thank you.
20 CHAIRMAN DUNLAP: Okay.
21 MR. CALHOUN: You mentioned that if you reduced the
22 VOC content on the paste wax it would kill the product form.
23 That is your feeling at this time?
24 A year from now, you may have a different feeling;
25 is that correct, if you have a little more time to work on
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1 it?
2 MR. SILVERS: I wish I could say that.
3 I wish that I could say that maybe a year from now
4 I could drop down to 50 percent or maybe meet the 45, but
5 when I look at paste wax, it has not changed in over 50
6 years, and it has been pretty consistent in the way they are,
7 and the people that use them expect a certain kind of benefit
8 and a certain kind of application.
9 I played around with paste wax in the past year,
10 and I can't do very much to alter it. I do not see the
11 technology that will be capable of producing 45 percent
12 limits.
13 MR. CALHOUN: With a little effort, and if you had
14 time, and realizing that there was a need to do it, you may
15 be able to come up with a different opinion, not that you
16 would, but that is a possibility?
17 MR. SILVERS: You are limited to the kind of
18 materials that you can put in the paste wax, because you have
19 no water.
20 Already you are limited to what you can use.
21 CHAIRMAN DUNLAP: Thank you very much.
22 You and Mr. Meguiar represent your company very
23 well.
24 MR. CALHOUN: One thing that I should mention that
25 Supervisor Silva didn't, maybe does realize, this company is
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1 in your county.
2 SUPERVISOR SILVA: Irvine.
3 CHAIRMAN DUNLAP: Okay. Thank you.
4 Mother's Polishes, Dennis Holloway and Craig
5 Burnett, followed by Robert Marchese, Mark V, Elsie Jordan,
6 Laurent Streichenberger and Ron Lane.
7 Is your colleague here with you by the way?
8 Tag team?
9 Fine. Let's do it together, if we can.
10 MR. HOLLOWAY: My name is Dennis Holloway, with
11 Mother's Polish Company.
12 We are a small California-based company.
13 The owner, my mother, Barbara Holloway, got the
14 business from my father. My father died about four years
15 ago. So she has taken control.
16 Our mission is and always has been and always will
17 be that we create a quality product at the best possible
18 price. Much like Meguiars, we are in the same boat.
19 We fight for shelf space. We fight for the same
20 customer. We could probably sell each others products
21 equally well, because we both manufacture a quality product.
22 I would like to thank you guys for being so open,
23 having the work group. The work group does kind of scare me
24 a little bit, because I think that the regulations are still
25 in place, specifically talking about the paste waxes.
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1 The paste waxes are our second best seller.
2 Removing the VOC's from the product, as Gary Silvers told
3 you, that it would put us down to a level where everybody
4 else is, or the complying product.
5 It is not hot air. It is not a joke. I know that
6 there are people that have tried to do it, but nobody has
7 done it successfully.
8 Those products are on the shelf and off the shelf.
9 They are the promotional type products that he was talking
10 about.
11 The raw material costs of putting these products
12 together that you, being the reduction, they have been
13 understated by about 300 percent, which scares me.
14 This whole process is just scaring me to death.
15 Barry can make it a little bit longer than we can. We
16 won't.
17 We will be gone, you know, just gone. Instead of
18 going over everything that Barry went over, because I have a
19 lot of the same things to say, I can tell you that as far as
20 costs involved with this, we spent over $100,000 already just
21 seeing if we could survive through this, through travel, R
22 and D expenses, seeing how to cost the products that you have
23 proposed to us.
24 We have found that cost per pound of reduction will
25 cost Mother's Polish itself over $160,000 a year. That is a
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1 big check. That is lot of profit.
2 That is a lot of R and D that we will not be able
3 to put into our new and upcoming products.
4 I'm sorry. I can't really talk any more.
5 Thanks.
6 MS. EDGERTON: Could I ask staff a question?
7 Can you remind me, in this particular category, how
8 long would they have before they would have to have a
9 complying product?
10 MR. AMES: They would have until the year 2005 for
11 manufacturer, and three years past that, because there is a
12 three-year sell-through period.
13 CHAIRMAN DUNLAP: So, 2008.
14 MR. AMES: That is correct, for sell-through, but
15 in the practical sense, they would have to begin
16 manufacturing no later than January 1, 2005.
17 CHAIRMAN DUNLAP: Okay. So, these same products
18 would be able to be sold in that time period?
19 Okay.
20 MS. EDGERTON: Thank you. I also wanted to, on
21 this, I was troubled that there would be no hardpaste wax
22 complying at all.
23 We usually don't adopt a regulation if there is
24 nothing to make us think that it could be done. I looked
25 back at this piece of paper that I had in front of me that
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1 was part of the slide, and you were saying that one product,
2 a complying product was put on the market after the survey
3 was conducted.
4 I just want to confirm with you that there is a
5 product that is getting the job done, that actually is
6 achieving the 45 percent VOC limit?
7 MR. AMES: There is presently one product that is
8 well below the proposed standard.
9 MR. CALHOUN: How long has that product been on the
10 market?
11 MR. AMES: Over one year.
12 We understand the manufacturer will be elaborating
13 on this, but our understanding, it has been about a year and
14 a half.
15 Given the sufficient time, we hope other
16 alternative formulations could emerge.
17 MS. EDGERTON: Does it work?
18 MR. AMES: That is -- perhaps the experts.
19 DR. FRIEDMAN: Do we have an index of market
20 share?
21 I don't know if it works or not.
22 MR. AMES: It has an unknown market share at this
23 time, and an unknown consumer acceptability, one product,
24 1996, it was marketed.
25 MR. BURNETT: My name is Craig Burnett.
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1 I am the chemist for Mother's Polishes, Waxes and
2 Cleaners, and the area that I would like to talk about today
3 is appropriately enough paste wax.
4 First, I want to thank the staff very much for
5 recognizing the difference in the need for an additional
6 category in the Polish, Wax, Sealant, Glaze and the Hardpaste
7 Wax category.
8 The proposal of working in task force is, of
9 course, a very important step forward in producing
10 regulations that make good common sense from both a
11 technological and economic and commercial feasibility
12 standpoint.
13 The category of true hard cake paste wax is a large
14 segment of Mother's business, and it is of grave concern to
15 us.
16 The current regulation as proposed is 45 percent.
17 This 45 percent is based on one product, with unknown market
18 share, unknown consumer acceptance, and certainly is not sold
19 in the same venues as premium products are.
20 Three of us consider it primarily a body shop
21 company. This low VOC product has been tested not only by
22 myself but by others, Mother's, Meguiar's, Eagle One, Mark V,
23 Oscar's, just to name a few of the companies that do market
24 hard cake paste waxes, and it falls short in efficacy.
25 Our customers will not accept this product. There
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1 are noticeable differences in both product form and
2 function. It is a much softer product with very slow dry
3 time and characteristics.
4 It leaves a smear behind and is difficult to use in
5 humid conditions. Product longevity is short, two weeks.
6 The function of VOC's in a paste wax is to carry a
7 large amount of waxes and polymers to the surface of the
8 vehicle. Rapid evaporation must occur allowing these waxes
9 and polymers to bond to the surface and adhere to the paint.
10 If insufficient drying time occurs, then most of
11 the protective barrier will be removed by your buffing rag.
12 It is just that simple.
13 What happens is that you also have visual problems,
14 because the only thing that is dried is the layer on the
15 surface. Underneath that it is not dry, and it smears, and
16 it smudges.
17 This low VOC product that we are talking about is
18 only one form of paste wax. All of the other companies that
19 I mentioned, and Mother's, also, produce what we call a
20 straight paste wax that contains no polishing compounds and
21 no fillers.
22 There is not much room to move chemically in that
23 particular product. That product will simply cease to
24 exist.
25 There is no known technology at all to produce a
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1 straight paste wax. So, we are not really talking
2 reformulation in this case. We are talking about inventing
3 new product forms.
4 These products are steeped in history, and these
5 formulas are so sound that they have not changed for
6 decades. My compatriot at Mother's Polish Company has more
7 than 50 years of paste wax experience, and he is certainly
8 what I consider to be a wizard at this, and we have been
9 working at this for a year, and we are not happy with the
10 results that we are getting.
11 Little has changed in the wax and polish industry
12 for more than four decades. The last technological
13 breakthrough of any real magnitude occurred in the 40's.
14 Early in this process industry met with staff, and
15 we provided a demonstration that clearly showed that 12
16 ounces of paste wax will polish and wax 6 to 8 times as many
17 vehicles as a 16 ounce liquid product, resulting in a net
18 savings of VOC's every time a can of paste wax was
19 purchased.
20 For the life of me, I can't understand why this
21 piece of science is being ignored. It is a really important
22 part of the paste wax picture that you understand how much
23 farther a paste wax goes than a liquid.
24 These are very, very unique products.
25 Let me state something categorically about the
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1 regulations. The formulas used in the regulations are so far
2 removed from the practical that to use them to assess
3 technological or economic feasibility is erroneous.
4 The regulations do not leave enough formulating
5 latitude to create products of varying characteristics. All
6 products would basically be the same.
7 In that case, it is the company with the most
8 marketing dollars that wins. This places dozens of small
9 California businesses, Mother's being one of them, at a
10 severe disadvantage and jeopardy.
11 I will skip my T-shirt analogy. I am running out
12 of time.
13 I think that we need to slow down a bit, and I am
14 very grateful for the opportunity to work with staff in the
15 future on the task force.
16 I would like to recommend that a 65 percent VOC
17 level that was proposed by staff back in February of 1997 be
18 adopted and that we take a real, real hard look at this
19 category.
20 CHAIRMAN DUNLAP: Okay. Thank you.
21 Do you have a comment?
22 SUPERVISOR SILVA: I can wait to the end.
23 I just have questions. I will take that into
24 consideration.
25 DR. FRIEDMAN: Let me make sure that I understand.
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1 Had we done the calculations for paste wax alone,
2 if we go back to different standards, 65 percent, take into
3 consideration the normalizing factor with respect to usage,
4 how often do things come out of the can, and can someone tell
5 me what that means in terms of tons a day?
6 Are we talking about something trivial, or is it
7 important?
8 It occurs to me that we are talking about a single
9 product that has been setup as a gold standard that may be
10 wrapped in tin foil, rather than gold, as the index paste
11 wax.
12 I need some help in understanding the magnitude of
13 this issue with respect to air quality.
14 MR. VENTURINI: Dr. Friedman, let me start with an
15 observation, and I will ask staff if they would like to
16 amplify a little bit more.
17 I think that one of the questions here is that you
18 have the liquid form and wax form, and people tend to have a
19 preference for the wax form or the liquid form, and those
20 that choose the wax form, according to Mr. Burnett, you get
21 more usage than if you purchase the liquid form.
22 From my perspective, I think that what the question
23 really is here is form, that he may be alluding to, if their
24 concern of the standard might eliminate the wax form, and
25 then people would have to go to the liquid form.
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1 DR. FRIEDMAN: I'm hearing the same thing as you
2 are.
3 I want to know about paste wax not the liquid with
4 respect to what the consequences would be of retaining it at
5 a 65 percent in terms of air quality?
6 That is a fair question.
7 MR. VENTURINI: Staff can provide that.
8 MS. SHIROMA: Dr. Friedman, if we went with the 65
9 percent VOC limit, we would lose an emission reduction of
10 about almost 500 pounds per day in that, and we achieve in
11 that category, we would reduce the effectiveness of that
12 category down to about 20 percent.
13 DR. FRIEDMAN: So, you were expecting three times
14 that amount of savings in VOC's?
15 MS. SHIROMA: Barbara, what is our total emission
16 reduction expected from this category?
17 MS. FRY: The total emission reduction expected is
18 470 pounds per day, which is about a 36 percent reduction at
19 the 45 percent limit.
20 If we went to a 65 percent limit, that reduction
21 would be reduced to 20 pounds per day instead of 470.
22 DR. FRIEDMAN: A 25 percent difference results in a
23 90 percent difference?
24 MS. FRY: In the VOC content of each product, yes.
25 MR. VENTURINI: Dr. Friedman, it is because of the
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1 distribution of products and the sales at those higher
2 levels.
3 MR. SCHEIBLE: 65 percent is very close to the
4 current average in VOC content in absence of the regulation.
5 CHAIRMAN DUNLAP: The thing, if I might get back to
6 Dr. Friedman on where you are going, the thing that, I think
7 it is where Mr. Calhoun was going.
8 We are talking about some time here. Maybe it
9 bears mentioning to some of the folks that have not been
10 regulated or controlled by air quality regulations for
11 products.
12 We have a comprehensive clean air strategy. What
13 you may consider to be, in all likelihood, a very small
14 minute piece of the air quality puzzle, we have been on a
15 quest to get clean air to protect public health for some
16 three or four decades.
17 It is important for us to get the emissions
18 reductions where we find them, but it is not our intent to
19 bankrupt people or deposition them so they can't survive
20 economically.
21 One thing not in your favor, for your arguments and
22 those of your predecessors, in my opinion, we are talking
23 about a lot of time, and that is where Mr. Calhoun was
24 going. You have a number of years to work on this.
25 Since you have not experienced the work by the
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1 Board, we, on occasion, admit defeat, that we have not been
2 able to achieve it, and we have modified programs as a result
3 of new information coming available when we can't do it
4 collectively.
5 So, I want to offer that up to you as one view to
6 consider as you hear the rest of the discussion.
7 MR. BURNETT: I do want to thank the staff and the
8 Board for the timeframe that we do have to work with.
9 However, if I work the calculations properly and do
10 the correct economic assessments on this product, it is going
11 to cost Mother's Polishes, Waxes and Cleaners $160,000 each
12 year to take care of our particular VOC emittance into the
13 air every year.
14 Believe me, that is not very much. It works out to
15 be about $50 or $60 a pound. That is a very, very large
16 burden to bear to reduce such a small amount of VOC's.
17 This is because this particular category is going
18 to require so much research and development because it is a
19 product form has been around for so long in its current
20 standard.
21 CHAIRMAN DUNLAP: How many more folks are in this
22 wax category here?
23 Have you signed up to testify?
24 Stand up if you have signed up to testify?
25 We have coming up Mark V. Come forward, Eagle One,
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1 why don't we take all of the wax folks in this category to
2 come forward now, and let's deal with it.
3 Let's hear from your colleagues. Let's hear it at
4 once.
5 Mark V, sir, do you have anything new or different
6 to tell us?
7 MR. MARCHESE: I was going to make my comments
8 based on the compounds, Category 200 as opposed to 210.
9 I tried not to talk about some of same things that
10 my predecessors have talked about.
11 CHAIRMAN DUNLAP: Peter, is it fine to hear from
12 him now, or is it going to throw it out of kilter?
13 MR. VENTURINI: He wants to address another
14 category, Automotive Rubbing and Polishing Compounds.
15 CHAIRMAN DUNLAP: I will hear from you in a
16 minute. I will come back to you.
17 I need your help, too. This is new for me. We
18 will do this together.
19 Madam, who might you be?
20 MS. JORDAN: My name is Elsie Jordan.
21 I am a chemist with the Eagle One Company, a
22 California-based company.
23 We manufacture a complete line of automotive
24 advanced products. We are concerned about the cost impact of
25 replacing VOC solvents with LVP type.
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1 When the Phase 3 of the Consumer Product
2 Regulations takes effect, we are left with many difficult
3 reformulations to perform. I will refer specifically to
4 reformulation of automotive waxes and polishes.
5 Waxes and polishes regularly performing with
6 consumer acceptance and formulated using the best technology
7 available based on a certain future, our job as chemists in
8 order to comply with these standards is to reformulate. We
9 have to reformulate.
10 In the case of waxes and polishes which are now
11 formulated with VOC's, the Air Resources Board expects
12 manufacturers like ourselves to use LVP solvents to replace
13 VOC's.
14 It is well-known among my industry that these waxes
15 and polishes with LVP's will be inferior in quality. If ARB
16 refuses see the premium quality of our products, they must
17 take that into consideration because of the cost
18 feasibility.
19 Here are some facts that we are faced with. I have
20 an example of paste wax. I am replacing the VOC with a blend
21 of VOC's and LVP's, so the cost increase would be 176
22 percent.
23 Liquid wax, the example I have here, replacing the
24 VOC with a blend of VOC and LVP, the cost increase would be
25 176 percent.
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1 The aerosol wax, just the propellent, it would be
2 1,148 percent increase in cost.
3 CHAIRMAN DUNLAP: Okay. You don't, even with the
4 time, you do not think you can bring the cost down, and you
5 do not think that the product will work well?
6 MS. JORDAN: Today.
7 CHAIRMAN DUNLAP: Is there anything -- I have got
8 that.
9 Is there anything else that you want to add so we
10 can continue with this? I am trying to capture this whole
11 issue.
12 MS. JORDAN: Yes.
13 Just one thing, about the floor waxes, on Phase 1,
14 they allow 90 percent VOC. Well, this is in reference to
15 paste waxes, too, and there are the categories that the solid
16 or semi-solids were exempt.
17 I wanted you to take that into consideration.
18 Thank you very much.
19 CHAIRMAN DUNLAP: Thank you.
20 MR. STREICHENBERGER: My name is Laurent
21 Streichenberger.
22 CHAIRMAN DUNLAP: Okay. Number 10 on our
23 witnesses.
24 You are with Oscar's Professional, right?
25 MR. STREICHENBERGER: That's correct.
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1 I'm the President of Oscar's Professional Products,
2 and I will make it real brief.
3 First of all, I am one of the companies that has
4 never heard about this survey until about three weeks ago.
5 Can everybody hear me?
6 I'm glad to see that we are going to keep on
7 working on this and that it is not dead, cast in stone,
8 because it is definitely going to hurt us very much.
9 We are a very small company. We are much smaller
10 than Meguiars and Mother's are, and 10 to 15 employees, and
11 we are less than $1-million in sales.
12 CHAIRMAN DUNLAP: Where are you located?
13 MR. STREICHENBERGER: Corona, California.
14 We manufacture there.
15 The reason why I raised my hand when we talked
16 about paste wax is because even though we manufacture a range
17 of car-care products, we specialize in manufacturing
18 hardpaste wax.
19 The thing that I wanted to concentrate on is the
20 economic impact that this regulation will have on businesses
21 like mine. I have heard about the cost effectiveness and
22 things like that, but I wanted to talk about the real impact
23 on businesses every day, and we have approached that already
24 a little bit.
25 The R and D cost is something that we have already
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1 talked about, or Craig Burnett and other people like that
2 have talked about. It is obvious that for people like me to
3 carry the same burden in R and D cost that the giants of our
4 industries are concerned is completely unbearable.
5 Basically this will kill my company very quickly,
6 because if I have to spend the same amount of money that they
7 do, and I can't just absorb it, and I have to increase my
8 price, I might as well just hand my business over to somebody
9 else.
10 The second way that I think this regulation is
11 going to kill my business is by changing the quality of the
12 products that I can manufacture, and we already talked about
13 that.
14 I think it is important to recognize, specifically
15 for the case of hardpaste wax, that those products are not
16 just products that you put on your car.
17 They also represent clear images of a brand. I
18 don't think that you can imagine a brand like Classic or
19 Meguiars or Mother's and I don't think that you can imagine
20 our company without a paste wax.
21 We are different as a manufacturer compared to
22 Clorox, as an example, because we do manufacture paste wax.
23 A lot of the bigger manufacturers don't want to
24 spend the time and effort into manufacturing a product like
25 this one, which is not sold a whole lot and in addition to
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1 this is slow and hard to manufacture.
2 So, by focusing on such a small issue, you will
3 really affect businesses by killing what makes their image,
4 what differentiates them.
5 The third point in which the regulation will affect
6 a lot of small businesses is not only in affecting businesses
7 like mine in manufacturers but also affecting small
8 distributors. A lot of businesses like mine and
9 Mr. Marchese's, Mark V, rely on small distributors that have
10 routes.
11 They in turn rely on us. If we go down, if we hand
12 over our businesses to much bigger companies, those small
13 distributors also are going to be hurt, because those giant
14 manufacturers that have already established distribution
15 networks and warehouse distributions and companies that
16 service the body shop industry, those small businesses will
17 lose a big share of their market simply because they don't
18 have the right relations with the right suppliers.
19 That is about all that I wanted to say.
20 SUPERVISOR RIORDAN: Just a quick question on your
21 product line.
22 Your paste waxes, what percent of your sales?
23 MR. STREICHENBERGER: It is hard to estimate off
24 the top of my head, but I would think that it is about 35
25 percent.
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1 SUPERVISOR RIORDAN: 35 percent.
2 Thank you.
3 MS. EDGERTON: I would like to make a couple of
4 general comments.
5 The witnesses information, all of you here,
6 California law specifies that each one of us has a particular
7 type of background, although there are a couple of public
8 members.
9 For example, Dr. Friedman is a physician, and in my
10 case, I'm a lawyer. I just want to remind, and as gently as
11 possible, that we sit here charged with the obligation
12 delegated to us from Federal law to State law to bring
13 California into compliance with Federal Air Quality
14 Standards.
15 It does not say that we can do it if we want to.
16 It says that we do it. If we do not do it, the entire State
17 will lose its Federal Transportation Funds, and any region
18 which has not achieved the Federal law, like in the South
19 Coast, we have until 2010 to achieve the standards.
20 If we don't do it, and I'm from Southern
21 California, from Los Angeles, if we do not do it, the penalty
22 is off-set at one to two. That means for every emission, if
23 we want to grow, it means that essentially we cannot grow,
24 because you have to take two out of the pot for every one you
25 add.
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1 I say that to contextualize for you the pain,
2 because, although I'm not serious, I don't really want you to
3 have to sit here every time we sit here, but if you could
4 have the experience that we have, you would be aware that the
5 pain is spread out, and many, many companies and sectors have
6 had this miserable experience.
7 I am reminded of when we had the Zebs, one
8 colleague made the comment that perhaps we have more faith in
9 you than you have in yourselves, which is, of course,
10 understandable, because you are facing actually doing it, but
11 I just would say to you that there are eight years and that
12 we do have a lot of faith in you.
13 Maybe we have more faith than you have in
14 yourselves.
15 I just wanted to make those comments, because I can
16 just feel the pain in the room. Thank you.
17 CHAIRMAN DUNLAP: Thank you.
18 MR. STREICHENBERGER: Well, if I may, it is obvious
19 that you have heard from other witnesses, we all want to
20 achieve those numbers.
21 We all want to do the best we can. There is a work
22 group about this, but I think that the numbers that are
23 proposed today are unrealistic, and the number of 65 percent
24 VOC is something that if we achieve that, it will be a lot
25 easier for everyone to live with.
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1 It is something that we need to do, but it is also
2 something that we need to pay for.
3 CHAIRMAN DUNLAP: Thank you. Okay.
4 Who else is in this wax category that wants to come
5 up?
6 Are we back to Mark V again?
7 MR. MARCHESE: I want to talk about the compounds,
8 Category 200.
9 CHAIRMAN DUNLAP: We will do another witness or
10 two, and then we are going to take a break, because our court
11 reporter is growing weary.
12 MR. MARCHESE: Okay. I will try and make this
13 brief.
14 My name is Bob Marchese. I am the chemist for Mark
15 V Products.
16 Mark V was incorporated in 1971 by my parents. We
17 are a minority-owned California company and employ 17 people,
18 and we manufacture in Anaheim, California.
19 Since 1971, we have specialized in manufacturing
20 professional quality detailing and mechanics supplies.
21 Our product line includes polishes, waxes,
22 compounds, rubber vinyl dressings, carpet shampoos,
23 degreasers, fabric protectors, air fresheners, brake cleaners
24 and car cleaners.
25 We sell these products in gallons, five gallons and
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1 55 gallon drum containers to automobile dealerships,
2 detailshops, bodyshops and carwashes.
3 Approximately 63 percent of our sales are generated
4 in California. As you may have realized, many of the
5 products we manufacture have been or will be regulated by
6 CARB when Phase 3 regulations pass.
7 In fact, if Phase 3 measures are passed as
8 currently composed, 51 of the 82 different products that we
9 manufacture will be regulated by CARB. That is 62 percent.
10 Yet none of the staff has seen me before during
11 Phase 1 or previous regulations, because I thought it was our
12 company's responsibility to help reduce the VOC's.
13 I do not want you to think that I am up here as a
14 polluter who does not want to do his fair share in reducing
15 air pollution. We have already reformulated 20 different
16 products, and the only reason that I am standing here before
17 you is for two particular categories, and that is 200 and
18 210.
19 I'm going to limit my comments to category 200, the
20 compounds, because you have already heard about the 210
21 category.
22 In my degreasers and carpet shampoos, I use a VOC
23 to emulsify grease. That is it. It serves no other
24 purpose.
25 With compounds, the VOC issue is to clean the
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1 paint, control the drying time, lubricate the abrasives, as
2 Mr. Meguiar stated, and dictate how easy the product is to
3 apply.
4 It is a balancing act. Depending on the purpose of
5 the compound, you need to emphasize some characteristics at
6 the expense of others.
7 The closest analogy I can give has to do with
8 cooking. Eliminating the amount of VOC in a compound is
9 similar to eliminating the amount of sugar in a cake.
10 The texture, consistency, the color and taste all
11 change. It didn't just make the cake less sweet, it changed
12 the whole product.
13 It will still be edible, but will anybody want it?
14 Luckily for the chef, you can use Nutrasweet, brown sugar,
15 powdered sugar, fructose a variety of other alternatives.
16 Right now the only alternative that we have is the
17 LVP's. They dry much too slow, and in cooler climates a
18 compound made with LVP solids would almost never dry.
19 For example, a commonly used mineral spirit that is
20 used in our industry takes 47 minutes to evaporate.
21 Isopar M, the LVP alternative, takes 455 minutes.
22 That is seven and a half hours. A study was submitted to the
23 staff members in April that tested the efficacy of compounds
24 that comply with the proposed VOC regulations.
25 Their study demonstrated that best complying
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1 product, out of the four or five that were tested, it took
2 140 percent longer to get the same results. It took more
3 steps to get the same results.
4 It required 40 percent more product, and because of
5 that, expelled more VOC's than a comparable non-complying
6 product.
7 This is exactly the opposite of what we should be
8 trying to accomplish. We all need to work together to limit
9 the VOC's in a responsible cost effective manner.
10 A conservative reformulating cost would easily
11 average $50,000 per product. For me to reformulate my
12 category 200 and 210 products would cost in excess of
13 $850,000.
14 A company with gross revenues of $3 million per
15 year cannot spend $850,000 on R and D expenses. It is
16 fiscally impossible.
17 Only large well-funded companies can afford such an
18 endeavor. These regulations would give them an even larger
19 competitive advantage over small companies.
20 This morning we found out about the proposed work
21 group, and we are happy, and we are looking forward to
22 working with staff, and we hope that by working together we
23 can all put together some regulations that we are proud of.
24 Thank you.
25 CHAIRMAN DUNLAP: Okay. Thank you very much.
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1 Why don't we take a five-minute break?
2 We have ten witnesses lined up. I will just call
3 out the names.
4 (Thereupon a brief recess was taken.)
5 CHAIRMAN DUNLAP: Okay. Ron Lane, Don Williams,
6 and Aaron Lowe.
7 Is Mr. Lane here?
8 Okay. Now we have 10 witnesses left.
9 We have a quorum of the Board here. I'm likely to
10 lose a member or two.
11 I would be grateful if the witnesses would use this
12 time that they have as efficiently as possible so that we
13 might have the proper kind of discussion that the witnesses
14 want us to have.
15 I have run through the list, and I will run through
16 it again quickly. Ron Lane, Don Williams, Aaron Lowe, Frank
17 Bohanan, Dennis Halton, Cheryl Hill, Herb Schreiber, Douglas
18 Dykstra, Chip Brewer, Denny Stein and Robert Graham.
19 MR. LANE: My name is Ron Lane.
20 I'm one of those first-time speakers that Paul
21 mentioned earlier when we started. I am a little nervous up
22 here. I have never been before anything like this before,
23 and I wish to thank you for the opportunity to speak here.
24 I come here both as a retailer selling the products
25 that we are talking about, particularly the premium waxes and
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1 polishes is the main point of interest for me, and as a
2 consumer of those products.
3 My company is Chief Auto Parts. We operate
4 approximately 350 stores in the State of California. In the
5 over 42 years that we have operated the State of California,
6 we have taken a great deal of pride in our record on
7 environmental issues.
8 In fact, as an example, we were the very first
9 retailer in the United States to offer free used motor oil
10 recycling to do-it-yourselfer market.
11 In fact, last year we spent over $500,000 and
12 recycled over one million gallons of used motor oil.
13 The regulations, as we understand them, will
14 virtually eliminate, and I think that we have heard some
15 testimony on that today from the small businesses, will
16 virtually eliminate the premium wax and polish category as we
17 know it today, unless there is some major technological, and
18 I am not a chemist, so I don't know all the technical types
19 of things, but as we know it today that category would be
20 basically eliminated from our shelves.
21 Because of that, I would just like to share a few
22 observations that I have, or that we have as a retailer and
23 also myself personally as a consumer.
24 First of all, the premium wax and chemical category
25 is an extremely niche market. It is part of the bigger
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1 picture, and it is like one or two of the categories that I
2 guess that we are talking about the regulations going into.
3 Our products, a lot of our customers, they want
4 that premium, and they demand the premium product. Some of
5 them don't, but there is big differences.
6 It has been testified to. They go on easier. They
7 last longer. They are more durable. They don't swirl, and
8 they give you a better, deeper shine and all of those things
9 can go on, and that is what the customers demand, I, being
10 one of them.
11 If we can't meet the needs of our customers, if
12 this goes through, our customers, I do not think they will
13 accept a lesser product. They have proven that time and time
14 again, if we try to put a product on the shelf that doesn't
15 work, that is how we add or take products off our shelves.
16 I guess that brings me up to second point. We are
17 talking about this just in the State of California. My
18 biggest fear is, and our company does $3 million a year in
19 the State of California in these product lines, the premium
20 waxes and chemicals, my biggest fear, and I haven't heard it
21 addressed, maybe it has been in committee or something, is
22 that I think there would be a big black market for these
23 products.
24 These car enthusiasts, these people in hot rod
25 clubs, these people that want this premium product on their
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1 car, they are going to on their trips to Reno, or to Oregon,
2 they are going to buy the product.
3 I mean, I don't know if we don't change some of the
4 standards that we are proposing on them that not only will we
5 lose the tax dollars in the State of California, but we may
6 not be accomplishing what we want to accomplish if there is a
7 black market created, and I really believe there would be.
8 I honestly believe that, because I've been in the
9 business for so long. I know how these customers think.
10 They will find a way to get it if they have to.
11 I do not know how we are going to enforce it. I
12 guess that is something that we are going to deal with also
13 if they went over and bought some in Nevada and brought it
14 back and used it on their car here.
15 That is one thing. The other point is that this
16 market to the premium product line, it is pretty well
17 dominated. You heard two or three or four of the people
18 today, and there are many other ones. This is probably the
19 last bastion of the family-owned business in our industry.
20 These small families that have been making these
21 premium waxes for years, they have their niche, and they have
22 their product, and the big companies that are out mass
23 producing the lesser quality products can't compete with
24 them, and they don't want to. They don't get into it.
25 So, I guess that is another fear. A lot of these
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1 people that we have sold on our shelves for years, and years
2 and years, would probably, as they say, maybe disappear, or
3 have to develop some other form of doing business.
4 I guess the fourth thing and the last thing, I will
5 make it as brief as I can, is that with this reformulation I
6 can't see any way that it would not raise the costs
7 considerably. They are talking about manufacturing costs,
8 which would be considerable.
9 To a company like myself there is a considerable
10 cost of dual merchandising, because we have to carry one
11 product for sale in California in our distribution center in
12 Los Angeles, and another product that we distribute to our
13 Nevada stores and our Arizona stores out of the same
14 distribution center, so you start dual inventory, and the
15 cost of all these inventories, you know what I am saying,
16 those kind of things would cost us a lot of money and would
17 actually be passed on to the consumers, or we would have to
18 absorb it ourselves.
19 So, I guess the final thing is that I just request
20 that you would reconsider the proposed regulations as they
21 apply to the premium wax and chemical category.
22 There are a lot of them. Our company has looked at
23 them. We are like the industry. We don't have any problems
24 with them, but with these particular ones, we really do.
25 I think it would be well worth our time to think
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1 about it. Thank you.
2 CHAIRMAN DUNLAP: Thank you. You did well for your
3 first time.
4 Mr. Williams, Blackhawk Museum.
5 MR. WILLIAMS: My name is Don Williams. I'm the
6 President of Blackhawk Museum.
7 I came here today, first of all, just to give you a
8 little background, the Blackhawk Museum has taken ten years
9 to develop. It is considered one of the World's greatest
10 museums for automobiles in the world. It is located in
11 Danville, California.
12 We have about 400 cars to choose from, all various
13 styles and rarity. In my 30 years in this hobby and
14 business, I have sold over 4,000 collector cars.
15 I have 125 cars of my own. I have friends all over
16 the world. I do shows in ten countries, four cities in the
17 United States, and I'm a fanatic when it comes to my passion
18 for the automobile.
19 All of my life I spent trying to preserve the great
20 history of the automobile as part of our history, as part of
21 our heritage. Except for the computer, the automobile has
22 affected mankind more than any other aspect of our life.
23 The people that take care of these cars and
24 preserved them, I like to preserve the automobile, there are
25 thousands of cars that have been preserved in the State of
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1 California, the premium waxes that we are talking about are
2 not the hundreds of waxes that are promoted on TV and radio
3 and in the shops. They come and they go, and they are new
4 and improved every other day, every other month, with new
5 colors on the cans and everything else.
6 The premium products are put out by the small
7 families. They are products that I have been using for 17
8 years. I'm not here to promote Meguiars or Mother's or any
9 particular brand, but I do want to say there is not anything
10 on the market right now, put out by the big companies, let's
11 call them, that can match the product and luster and
12 performance that we get in the presentation and preservation
13 of the quality of the cars that we keep.
14 They do help maintain the quality of the cars.
15 Many of the collectors put tens of thousands of hours in the
16 automobiles of labor. We are not talking money.
17 I am just here to ask you to think about the small
18 minority packaging. There are probably less than 12
19 companies that manufacture the products that we are talking
20 about in the hard waxes and stuff. There are hundreds of
21 companies that promote waxes.
22 So, I would like you to please consider not to
23 group them together, to consider them separately, and thank
24 you very much for the few minutes.
25 CHAIRMAN DUNLAP: Thank you.
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1 Aaron Lowe and then Frank Bohanan.
2 MR. LOWE: My name is Aaron Lowe, and I'm the
3 Senior Director for Regulatory and Government Affairs to the
4 Automotive Parts and Accessory Association.
5 The APA is an International Trade Association
6 representing manufacturers, manufacturer representatives,
7 distributors, and retailers of automotive parts, chemicals
8 and services.
9 We are very concerned about the impact of these
10 proposals on the rubbing polishing compounds and waxes,
11 polishes, sealants and glazes.
12 Since I'm pretty late in the afternoon, I think
13 everybody has said or stated a lot of the issues that I think
14 are really important in this category.
15 I wanted to raise a few issues that have not been
16 brought up. We don't believe that CARB has sufficient
17 information to issue a rule on this category.
18 There are over a 120 appearance product chemicals
19 companies that we have identified from our membership and
20 trade show directories and from the Internet, and there are
21 only about 60 companies that are part of the survey.
22 Therefore, at least half of the companies which
23 should be regulated in this proposal either did not respond
24 or never received the survey.
25 A lot of these are very small companies. Clearly
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1 the large gap in reporting data strongly indicates that the
2 economic impact of this proposal on small business and the
3 environmental impact has been under reported.
4 I wanted to emphasize one point that was stated
5 earlier and that is that these companies face a very limited
6 set of reformulation options presented by the low VOC
7 limits.
8 They will be forced to develop market products
9 which are similar to all other offerings in this industry.
10 What reasonable consumer will purchase products in
11 these small companies which costs more compared to products
12 made by the larger companies, when their performance will
13 basically be the same?
14 Without a doubt the homogenization of the
15 appearance product category will be caused by this rulemaking
16 will likely mean the exportation of this industry from the
17 State of California and away from the small businesses that
18 have been the main stay of the higher end appearance market.
19 I think that Ron did a really good job talking
20 about the retail market and the impact. One point in that is
21 that they will not have to travel to Nevada or anywhere else,
22 because on the Internet there are tons of waxes available on
23 it, and there is also mail order.
24 There will be a lot of ways that waxes will be
25 available in California that are high-end that will be very
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1 difficult to enforce all the different aspects of it.
2 So, this demand is out there, and we think it needs
3 to be met. Also, the loss to member retailers as a whole is
4 about 14 percent of store sales. It is a very sizable on our
5 retail members.
6 We think that most of the companies in our industry
7 are committed to try to do their part to reduce VOC's in
8 their products, however, small companies cannot stand idly by
9 while actions are taken that will jeopardize their survival.
10 We think that a really good step has been taken by
11 offering to do this work group, and APA plans to work with
12 staff to try to make this work group very effective and try
13 to accomplish the goal.
14 I think that it needs to be a full industry work
15 group with all of the associations and companies that are
16 impacted by this rulemaking to be part of it, and I think
17 that it needs to be in cooperation with the Board and staff
18 in order to be effective.
19 That concludes my statement. I think that the
20 staff has done a great job in trying to reach out to us and
21 to work with us on a lot of these issues, and I think that we
22 have a ways to go to try to put a resolution on them.
23 I think it is a credit to staff that they have come
24 to resolution on many of the issues in the automotive product
25 area that they have and that this is one of the few that
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1 really needs more study.
2 CHAIRMAN DUNLAP: Thank you. I appreciate those
3 comments, also, the kind words about the staff.
4 That is good to hear.
5 Okay. Mr. Bohanan, for your second visit before
6 the Governing Board today.
7 MR. BOHANAN: I wear a lot of hats.
8 I will dispense with the introductions, since I was
9 here before, and since a lot of the people that spoke before
10 me have touched on some of the things that I want to touch
11 on, I will try to --
12 CHAIRMAN DUNLAP: You did not like the last
13 measure, as I recall.
14 Do you like this one any better?
15 MR. BOHANAN: I like parts of it.
16 I guess what it comes down to basically is that it
17 is an issue of focus. I think that one of the things that
18 you have heard here today is that we are talking about a
19 very, very small subset of craftsman.
20 These gentlemen and ladies that work in these
21 companies are specialists. They deal with car collectors.
22 I am speaking today not only for SEMA but also for
23 the Association of California Car Clubs and numerous other
24 vehicle enthusiasts.
25 You heard from the Blackhawk Museum. These people
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1 have very valuable vehicles. I mean, you are talking a
2 hundred thousand, million dollar vehicles in some cases.
3 They are not going to put anything on that
4 vehicle. They want something that is going to protect that
5 finish, that is going to give them the quality of shine that
6 they need in the show situation. They have rubber moldings
7 and things like that they need to protect so they do not rot
8 out and so forth.
9 They are very discriminating, and you heard that
10 they will get it wherever they have to get it, I would say is
11 right on the money.
12 The other thing is Vehicle Code 5050 basically says
13 that they have the right, passion about the vehicles and
14 there could be some argument that this would inhibit them in
15 some way from that.
16 The other thing that you have to remember is that
17 we are talking small companies here. These are not large
18 multi-national, like 3-M and DuPont.
19 3-M and DuPont don't use Grandpa's formula.
20 3-M and DuPont don't use the types of product
21 research that they have. They don't go to the shows.
22 They have their place in life. They sell to the
23 mass market. They want to do that. They have to do that.
24 They are big.
25 They have a lot of products. They have to amortize
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1 their costs. They have a lot of products to amortize their
2 costs so they have big research budgets.
3 These are small companies. You heard the numbers,
4 you know up to $850,000, they cannot absorb those kind of
5 costs.
6 They also have to pay more for their materials and
7 pay more for their shipping. All these things enter into an
8 apples and oranges type of comparison.
9 I guess basically what we are saying is that
10 because of the differences, because of the unique market
11 which these companies serve, you have to recognize that they
12 deserve some special consideration.
13 Now obviously to the extent that technology allows
14 them to meet their users requirements, standards that are
15 lower are desirable by all concerned. You have heard that.
16 But there may be some situations where you cannot
17 achieve that performance and achieve the low VOC limit.
18 I guess what we are saying is that you need time to
19 figure that out, where that line really is, and I do not
20 believe that the focus of the work that has been done to date
21 has adequately considered this very, very small special
22 niche.
23 I will give you another example. Solvents used in
24 racing. You have Pamona Drag Strip down in Southern
25 California. You hold national events there.
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1 Between rounds they tear down engines. They need
2 solvents to clean these engines. If they have something that
3 is not as effective or something that leaves a film on a
4 clutch pack or on a fly wheel and that causes that clutch to
5 slip in a different way than they anticipate, they lose the
6 race.
7 That is big money. They have sponsors. There are
8 a lot of secondary consequences which have not been looked
9 at, and I think that those need to be looked at, and this
10 special niche needs to be considered.
11 Basically, I think that it comes down to technical
12 and commercial feasibility for special applications. I would
13 be willing to work with staff, as I am sure the other
14 manufacturers are and car clubs and so forth are also to find
15 some way of accommodating the mutual interests.
16 Thank you.
17 CHAIRMAN DUNLAP: Thank you.
18 Dennis Halton, with No Touch, followed by Cheryl
19 Hill, of Quaker State.
20 MR. HALTON: Good afternoon.
21 My name is Dennis Halton. I am president of No
22 Touch, North America.
23 We are based in Irvine, California, and we are a
24 subsidiary of a Japanese company.
25 You may or may not be familiar with our brand new
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1 products, but we primarily make rubber and vinyl protectants,
2 and I would like to circulate a brochure with the picture of
3 these products, if I could.
4 In the last two to three months, we have been
5 actively involved in making various presentations, both in
6 written and oral form at these hearings.
7 In contrast to almost every other participant, No
8 Touch is strongly in favor of the proposed standards, in
9 fact, we are in favor of stricter and faster standards of
10 enforcement in certain areas.
11 We have sent a statement of concurrence that it is
12 our opinion that for all automotive categories, except under
13 coatings, where we do not have experience, we believe that
14 the standards as originally formulated in the document from
15 about a month ago, are both technically feasible and
16 commercially feasible.
17 The second issue that I would like to address
18 specifically relates to rubber and vinyl protectants. This
19 category is the second largest VOC emitter in the automotive
20 category. The largest is multi-purpose lubricants.
21 According to the data compiled by the staff, 2,818
22 pounds of VOC's per day are emitted by aerosol protectants
23 and non-aerosol protectants.
24 That is just over one million pounds per annum of
25 VOC's from this category. About 600,000 pounds come from
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1 non-aerosols and 400,000 pounds from aerosols.
2 The standards proposed initially had an effective
3 date of the year 2000 for non-aerosols and the year 2005 for
4 aerosols.
5 So, those standards allowed an extra window of five
6 years for aerosols. I was very disappointed to learn today
7 that the proposed implementation date for non-aerosol
8 protectants is now being pushed back from the year 2000 to
9 the year 2003, because that just provides frankly for extra
10 time for unneeded unnecessary VOC's to pollute the
11 environment.
12 No Touch, the parent company in Japan, developed
13 and patented water-based aerosol silicone sprays, called tire
14 foams, we are the leader in that category, and I do not know
15 if you have one of our products there on the shelf.
16 I can see some of our competitors.
17 If not, it is available at Nineteenth and L in the
18 Bearing Supply.
19 CHAIRMAN DUNLAP: Send somebody over to get it if
20 it is not up there, Mike.
21 MR. HALTON: Presently, we have 15 percent VOC
22 level in our aerosol protectant, and we can immediately
23 reduce that level to 10 percent simply by --
24 CHAIRMAN DUNLAP: So you can do it?
25 MR. HALTON: We can do it, and we believe that
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1 others can do it quickly and now.
2 CHAIRMAN DUNLAP: Very good. Thank you.
3 I appreciate those supportive comments.
4 Okay. Cheryl Hill, Herb Schreiber and Douglas
5 Dykstra.
6 MS. HILL: Hi, my name is Cheryl Hill, and I'm with
7 Quaker State Corporation, and I am here supporting Blue
8 Coral, and Herb Schreiber, who is the Technical Director of
9 Blue Coral, since we have a limited amount of time, and it is
10 late in the day, we thought we would try and combine as much
11 as is possible.
12 What we are trying to address right now is the
13 Rubber and Vinyl Protectant category, as you have heard from
14 other people in other categories there are product
15 differences. There are premium and non-premium products.
16 We very much formulate our products as a
17 non-water-based product. They have components in them that
18 are very different than what is in the water-based products
19 as some of our competitors have.
20 We have looked at trying to obtain the same results
21 in water-based formulations or low-vapor pressure
22 formulations.
23 We discussed this with staff at length, and what we
24 would just like to recommend is that you accept staff's
25 proposal for the extension for three years and that you
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1 consider adopting a work group for this category.
2 We would also like to have you consider that there
3 is precedence for consideration of premium products, because
4 in the personal fragrance category, perfumes were allowed to
5 continue kind of a similar marketing campaign where they
6 allowed that fragrances last all day, but there is no
7 specific labeling on their products that make them
8 different.
9 It is just inherently in the marketplace people
10 know that these products are different, as in the waxes and
11 other categories.
12 We would like to opportunity to continue the
13 discussions.
14 CHAIRMAN DUNLAP: Okay.
15 MR. SCHREIBER: In terms of the Rubber and Vinyl
16 Protectant category, I'm very pleased that the discussion
17 earlier this afternoon did bring, brought up product
18 distinctions, efficacy and, as Dr. Friedman brought up, the
19 percentage or number game that we are all involved in.
20 It is not a ramp with evenly distributed set VOC's
21 for any category. It is much more now of a step situation.
22 As you move that percent VOC restriction past a
23 certain step, certain players do fall out, and it is a very
24 important distinction.
25 Meguiars has stated product efficacy is very
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1 important. Cheryl did mention we support, we being Blue
2 Coral, the 2003 as an effective date.
3 With this time, we think that it is quite important
4 to form a working group to look at the distinctions between
5 these products and the possibility of a heavy-duty
6 subcategory for rubber and vinyl protectants, and the slide
7 ARB has mentioned that their initial work at the situation
8 was inconclusive, and we appreciate that.
9 We think with the time available and a working
10 subgroup we can make certain that the facts be known very
11 clearly.
12 CHAIRMAN DUNLAP: Thank you. I appreciate that.
13 Okay. Douglas Dykstra, from Lilly, Chip Brewer and
14 Denny Stein, and our last witness, Robert Graham.
15 MR. DYKSTRA: Good afternoon, Chairman Dunlap and
16 Members of the Board.
17 I am Doug Dykstra, from Guardsman Lilly. We
18 package private label automotive products. We also package
19 beverage protectants, cleaners, a lot of solvent-based
20 products that are available in the commercial industry.
21 Guardsmans supports the staff proposed
22 modifications to the mid-term measures. I would also like to
23 recognize and thank the staff members for the work that they
24 have done in developing these standards.
25 They have put a lot of work and effort into working
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1 with the industry, and we appreciate it. Industry is going
2 to be challenged by these, but we feel that they are
3 attainable.
4 I do not make waxes in that category. Thank you.
5 CHAIRMAN DUNLAP: Thank you for not making waxes.
6 Mr. Brewer.
7 MR. BREWER: Mr. Chairman and Members of the Board,
8 we do make waxes, but we don't make automobile waxes, I'm
9 happy to say.
10 We do make products in several of the categories
11 that are covered by this regulation, including wasp and
12 hornet spray and floor wax strippers.
13 We appreciate during the development phase of this
14 regulation very much the efforts of the staff to reach out
15 for industry comments, including extraordinary efforts to be
16 available for teleconferences that we had with some of our
17 larger industry meetings during the course of the year.
18 The VOC limits and other requirements in this
19 regulation will require SC Johnson Wax to reformulate or
20 change the labeling on several of our products, but for the
21 categories affecting us, we believe that the staff has
22 fulfilled its statutory obligations, and the standards are
23 commercially feasible and technologically feasible, and
24 therefore, we expect to meet the limits and deadlines in the
25 table of standards.
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1 So, therefore, Mr. Chairman, we support the rule.
2 CHAIRMAN DUNLAP: Thank you, Mr. Brewer.
3 We appreciate that view.
4 Mr. Stein, from 3M.
5 MR. STEIN: I think that I have been mentioned a
6 few times already today.
7 Basically, I'm here, ladies and gentlemen of the
8 Board, to support staff, support the rule and support the
9 changes that they have recommended.
10 We supply products in 15 of the 18 categories, and
11 we do indeed supply the automotive wax polishes, and we have
12 a line of products that were introduced in 1996, and we do
13 focus those on the car care folks, the hobbyist, and our
14 sales are increasing as we speak, so we feel that we have
15 products that are efficacious.
16 We focus on high performance. We are not at the
17 low end. So, I have to disagree with some of my colleagues
18 that I think there is technology out there.
19 CHAIRMAN DUNLAP: Can I ask a question?
20 That is music to my ears as far as this debate
21 goes, but tell me, how can you do it?
22 Is it just because you are big?
23 Is that it?
24 That is the argument that people make.
25 Can you do it just because you are large?
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1 MR. STEIN: No, because a lot of times, because we
2 are large, we can't do it, and the reason being, a lot of
3 times because of the potential mark-up, we are not willing to
4 spend the dollars.
5 Also, sometimes technology is just not there. We
6 also rely heavily on our vendors and suppliers. We don't
7 necessarily develop the chemistries ourselves. We go out
8 there and find them.
9 Sometimes we do, but sometimes it is a lot of
10 luck.
11 In this situation, it has taken a lot of effort.
12 There are some products that are out there right now that
13 currently do not meet the proposed limits. We are going to
14 have to do some R and D, but our R and D folks say they think
15 it is feasible.
16 Granted it could come along, and we don't make it.
17 We had that problem last November that we talked about with
18 aerosol adhesives, but at this point in history we feel that
19 it is feasible.
20 So, we totally support the limits that the staff
21 has proposed.
22 Thank you.
23 SUPERVISOR RIORDAN: Mr. Chairman, could I ask a
24 quick question?
25 Out of curiosity, the paste wax that we had up
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1 here, which I think was your product, do you know whether or
2 not that was developed internally in 3M or something that was
3 brought from outside?
4 MR. STEIN: I would rather not say in a public
5 forum.
6 If you see me afterwards, I will tell you.
7 CHAIRMAN DUNLAP: Any other questions?
8 Ms. Edgerton, certainly there has to be a question
9 there?
10 MS. EDGERTON: No, there is not.
11 Thank you.
12 CHAIRMAN DUNLAP: Very good. Thank you, for that
13 illuminating testimony.
14 Mr. Graham. You are the last one.
15 MR. GRAHAM: I could say they saved the best for
16 last, but I won't.
17 CHAIRMAN DUNLAP: In this case, we probably did.
18 MR. GRAHAM: My name is Bob Graham.
19 I am Vice President and Technical Director for
20 Sherwin Williams Diversified Brands.
21 My main reason for standing before you this
22 afternoon is to state my support for the regulation as it
23 stands, along with the amendments and to particularly mention
24 the commitment that the staff has made for working with
25 industry in the future on several of the product lines that I
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1 think you have heard quite a bit about this afternoon.
2 Having said that, I would also like to extend my
3 thanks to the staff along with the thanks of my company and
4 our Regulatory Affairs Director, Mr. Douglas Raymond, for all
5 of the hard work that they have done and their willingness to
6 work with us and with the industry.
7 Thank you.
8 CHAIRMAN DUNLAP: May I ask a question about the
9 number of products that your firm makes for the categories,
10 how many categories?
11 MR. GRAHAM: In this case, we are represented by 14
12 of them.
13 CHAIRMAN DUNLAP: 14.
14 MR. GRAHAM: Well, we don't make waxes.
15 CHAIRMAN DUNLAP: Very good. Thank you, very
16 good.
17 Ms. Hutchens, is there anyone else that signed up
18 with you?
19 Is there anyone else in the audience that wishes to
20 speak on this item?
21 All right.
22 So, we will then conclude the public testimony on
23 this Board item. I will ask staff to summarize the written
24 comments that we received.
25 How many have we received?
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1 MS. FRY: Seventeen.
2 CHAIRMAN DUNLAP: Feel free to put them in themes
3 for us, and of course, mention the names but you can dispense
4 with the exhaustive detail, I think.
5 MS. FRY: Okay. We received 11 very similar
6 letters, one from Mark Graham, of PACCAR Automotive, one from
7 Grant Hutchins, of Hi/Lo Auto Supply, another from Arnold
8 Leanse, from Romero/Surlow Sales, Bill Quest, EF Products,
9 Inc., Mike Quest, Quest, Crelia and Company, Jim Norton,
10 Hirsig-Frazier Company, Peter Goldman, Reed Union
11 Corporation, Jennifer Thomas, California Automotive
12 Wholesaler's Association, Jim Bazman, of CFK Auto and Jerry
13 Fields, a private citizen.
14 They all expressed concern about the auto waxes and
15 polishes, about their performance, and the concern that
16 non-complying products would be illegally sold in
17 California.
18 They questioned whether the environmental benefits
19 are worth the cost impacts, and as we discussed earlier, we
20 proposed forming a work group to address these concerns.
21 We also received a comment letter from Kenneth
22 Dalpe from the California Trade and Commerce Agency. He
23 recommends that where the industry cost index indicates
24 higher cost that a few additional products subcategories be
25 established in response, as we discussed, we recommend
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1 forming a work group for several of the automotive
2 categories, and he also comments that the cost effectiveness
3 should be determined by dividing the National fixed cost by
4 the California reductions, we disagree, for all of our
5 Consumer Product regulations, and today's proposal, we
6 estimated National total fixed costs to National benefits and
7 California's share of fixed costs to California benefits.
8 This is appropriate because products are
9 distributed nationally, and costs are recovered nationally.
10 He also proposed an elimination of the two-tiered
11 standards in the recordkeeping, and we have done that.
12 He also proposed that we develop a definition for
13 commercially feasible. We have commercial feasibility
14 described in the staff report, and it is done on a case by
15 case basis.
16 We received letters of support from Andrew Steckel,
17 of the U.S. -- George Brown of the National Aerosol
18 Association, Victoria Jones, of the Clorox Company, Paul
19 Goslin, of the Department of Pesticide Regulation and Pat
20 Layton, of the South Coast Air Quality Management District.
21 CHAIRMAN DUNLAP: Okay. Very good.
22 Mr. Kenny, do you have any closing comments before
23 the Board engages in discussion?
24 MR. KENNY: Yes, I do Mr. Chair, I do have a few.
25 What I really wanted to do was put this a little
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1 bit in context.
2 When we proposed bringing the mid-term measures to
3 the Board, we recognized that what we would be doing is
4 looking at a very daunting task.
5 There are hundreds of manufacturers, if not
6 thousands of manufactures in this particular arena, and we
7 had a large number of staff, as I indicated to the Board at
8 the beginning of this particular presentation.
9 You can see that, in fact, that what we tried to do
10 is look at the number of categories that we were going to try
11 to address, and we tried to address them in a way that was
12 reasonable, straight forward and at the same time recognize
13 the needs of the industry to have time to reformulate.
14 In many of these categories, we have provided up to
15 eight years of time for this particular industry to
16 reformulate.
17 At the same time, in order to try to address some
18 of the issues that they have raised, we have also proposed
19 the work group.
20 In the context of all of that, we do think that
21 what we have before the Board right now is a proposal in
22 which we will be able to achieve the goals that this Board
23 has set for us in the SIP.
24 The SIP is, again, something that we are using as
25 our pathway to the future, and yet still trying to take into
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1 account the many issues that have been brought to us by the
2 industry.
3 What we have tried to do, and I think rather
4 successfully, is to navigate a course in which we have
5 balanced the needs of this Board to make sure that we do
6 achieve the goals of the SIP and also try to balance the
7 needs of the industry and try to reformulate it in a
8 reasonable period of time.
9 With those comments, I would recommend to the Board
10 that they adopt the proposal as recommended by the staff.
11 CHAIRMAN DUNLAP: Thank you for that.
12 Mike, could you say a word or two about the
13 inventory?
14 I made some comments earlier that you seemed to
15 agree and embrace those. Tell me a bit about the process?
16 MR. KENNY: Sure.
17 The inventory for the consumer products in the 1994
18 SIP is approximately 260 tons per day statewide.
19 If you look at that particular inventory, what we
20 did through the near-term measures is we achieved about an 80
21 ton per day reduction, which left approximately 180 tons of
22 additional emission reductions to achieve.
23 However, since 1994, as we achieved greater and
24 greater information about the consumer products inventory, we
25 have learned that inventory may have been originally
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1 overstated.
2 So, what we are doing is we are trying to actually
3 come up with a very clear sense of precisely what that
4 inventory is.
5 The overstatements come from, as the staff
6 indicated, some of the VOC's actually go down the drain and
7 they biodegrade, and some of the VOC's that were in the
8 inventory were actually double-counted because of the fact
9 that they were being regulated by other State or local
10 agencies.
11 But in addition to that, there is at least a
12 question in regard as to what the true inventory may be, and
13 so we have been working with the industry, and we have had
14 very recent discussions where we have committed to going
15 forward and trying to continue that working relationship.
16 We do anticipate that inventory as we go forward
17 will again basically be subject to greater and greater
18 information to give us a more precise sense of precisely
19 where that inventory lies.
20 So, with that in mind, I think you will ultimately
21 see a change in the SIP's reflecting lower inventories for
22 consumer products than is currently reflected in the SIP and
23 at the same time we will still go forward with the obligation
24 that we brought to the Board and that the Board adopted in
25 1994 achieve substantial emission reductions from the
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1 consumer products category.
2 CHAIRMAN DUNLAP: It is going to be important that
3 you have the proper forums to bring that out to the
4 stakeholders and ultimately to the Board.
5 Let me have you say a word, Mike or Peter, say a
6 word about these work groups and committees and process.
7 We have heard a number of people indicate that they
8 are pleased with some commitments that staff made relative to
9 process. I compliment you on that.
10 They are not suspect. I would like to know more
11 about them.
12 Peter, why don't you talk about that?
13 MR. VENTURINI: Certainly.
14 Thank you, Mr. Chairman.
15 They are basically, and I will deal with the
16 automotive category first, based on the discussion we have
17 basically three categories where there is interest in forming
18 this work group.
19 That is the Automotive Rubbing and Polishing
20 Compound Wax category, Automotive Wax and Polish Sealant or
21 Glaze and the Hardpaste Wax category.
22 If I may suggest, we would be prepared to within
23 the next couple of months have an organizational meeting for
24 this work group and have that open invitation to all the
25 interested parties, and typically, as we have done in the
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1 past, the first meeting has been to set objectives and the
2 ground rules, guiding principles and where we want this group
3 to go.
4 That, and we also appreciate the offer CSMA made to
5 help in this endeavor. Also, we would, in addition to the
6 technical issues, we would suggest that it would be
7 appropriate to revisit and try to resolve some of these cost
8 differences that some of the representatives have mentioned.
9 CHAIRMAN DUNLAP: So, for those witnesses that have
10 remained here, since most have, do you want them to get to
11 you, Peter, if they want to participate?
12 MR. VENTURINI: On the staff, that's correct.
13 CHAIRMAN DUNLAP: Let us know, relative to
14 processes, that associations or sub work groups may get
15 together and work with people, correct?
16 MR. VENTURINI: Correct.
17 There is one other issue that was suggested by
18 Quaker State representatives, that there be some further
19 discussion on this Rubber Vinyl Protectant category.
20 We do not see the need for a formal work group, but
21 as part of the technology assessment, we will continue to
22 work with them, because it is somewhat of a unique issue
23 here, and we will commit to work with them to try to address
24 their concerns and see if we can reach some understanding.
25 CHAIRMAN DUNLAP: All right.
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1 Now, Mr. Kenny, I will ask you, or Ms. Walsh, to
2 respond to this question.
3 I indicated earlier that on occasion we have set
4 more aggressive standards than can be achieved. I would not
5 use defeat. That is a bad word to use, but we have admitted
6 that we may have pushed things too far.
7 I would like for you to take a word, or spend a
8 moment or two and talk about what this Board did in response
9 to that occurring and what people out there that are
10 confronted with regulations that they think may be
11 technologically unfeasible, even though we heard some back
12 and forth on the commentary, but I would like you to talk a
13 little bit about the process when you are confronted with
14 that.
15 MR. KENNY: All right.
16 It has been the tradition in the history of this
17 Board that it has engaged in technology enforcing.
18 To the extent that technology forcing is placed
19 upon the industry to respond, what has happened historically
20 is that the industry have traditionally responded.
21 However, there have been occasions in which the
22 industries, despite their best efforts, were unable to
23 respond, and then what happened is that industry or those
24 industries then came back to this Board after coming to the
25 staff and telling and showing the staff where these
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1 particular problems lay, and at that point in time both the
2 industry and staff made presentations to the Board with
3 regard to recommending a change in those original technology
4 enforcing standards, and the most recent examples of those
5 are, that the Board is most familiar with, is with regard to
6 hairspray and with regard to adhesives.
7 Those are just in the last several months where the
8 Board did hear why those particular technology enforcing
9 standards despite the best efforts of the industry and
10 despite the best efforts of the staff to achieve compliance
11 were not attainable, and there were compromised solutions
12 that were worked out in order to provide for some additional
13 time to the industry to comply with the particular new
14 standards that were established and that process will
15 continue.
16 CHAIRMAN DUNLAP: Okay.
17 For those in the audience that might dissect a few
18 points that Mike made, this is not to suggest that you don't
19 work as hard as you can to achieve the goals, but that you do
20 all that you can to try to achieve it, and if you fall short
21 you come in, present the information to us and let us have a
22 chance to talk to you about it, have some technical
23 discussions, and then if we can be convinced, and we have
24 been, we will make proper regulatory modifications to
25 accommodate you, provided it is, of course, proven that you
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1 need the time.
2 I think that may not be the type of comfort that
3 some hoped to have. We are able to admit some cases where it
4 has been proven, and we have done that.
5 That is a responsible regulatory approach.
6 MR. KENNY: If I might add, also, I think also that
7 the history has shown that this Board has set some
8 technologically daunting standards for industry to commit to
9 and to comply with.
10 The history has also shown that industry has almost
11 always made it. It has been the exception when industry has
12 come back to this Board and asked for some change in those
13 originally established standards.
14 CHAIRMAN DUNLAP: Okay. I have said probably too
15 much.
16 Do my colleagues have any questions or comments?
17 MS. EDGERTON: I just wanted to say to the staff
18 that I am very impressed with the work that you did.
19 Thank you. Very impressed.
20 MR. CALHOUN: Mr. Chairman, I listened very
21 carefully to what Mr. Kenny had to say, and I guess that I
22 have been a victim in the past of having to appear before
23 this Board regarding the standards and in some cases, in most
24 cases, in every case that I can think of where the standard
25 was not technologically feasible, something was done to
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1 change it.
2 I told some of the industry people this. Maybe
3 they were heartened by it, but it is good to hear someone
4 else say that.
5 If the decision is to move ahead on these
6 regulations today, I want to do it with the understanding
7 that we are coming back and at some specific time, maybe one
8 year, or two years, something, with a progress report, so
9 that we feel more comfortable about the decision that was
10 made.
11 CHAIRMAN DUNLAP: I would echo that. I think there
12 is support for that on the Board to do that.
13 Mike, I would ask you to do that. I would
14 emphasize, Joe, if I might on that point, that we take a
15 particular look at those that testified today that said that
16 their very livelihood is threatened, that their company may
17 not be able to compete or may not be able to transition, I
18 mean that concerns me.
19 While it is not the business of this Board to be
20 overly concerned about economic development, per se, but we
21 do need to be sensitive. We need to make sure that we are
22 not having an adverse impact, and we are not costing people
23 their businesses.
24 I am concerned about it, and I know that my
25 colleagues on the Board are. So, Peter, the charge to you
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1 and Mike Scheible is to make sure, like you have done on
2 other consumer product areas, that you are paying attention
3 to that, and you can get back to us if a problem situation
4 like that arises, because that is a consequence, it has the
5 potential to be a consequence of enforcing technology for
6 some of the smaller companies, and we are concerned.
7 So, I think that it is a good idea.
8 Mike, maybe you can get back to the Board with a
9 memo with suggested time periods in a month or so.
10 MS. EDGERTON: I have another question.
11 CHAIRMAN DUNLAP: First, Mr. Silva.
12 SUPERVISOR SILVA: If you asked me, I was inclined
13 to vote against this item, or at least seek postponement, but
14 I do feel that staff is willing to work with the industry.
15 I think that when you have one-size-fits-all
16 regulations, I think that it is unfair to a lot of
17 businesses, and I do have a very large concern with that.
18 I would like to see it come back within a year.
19 MR. KENNY: Actually one suggestion I might make,
20 instead of trying to come back within a year, which I think
21 is a small time frame, especially when we are looking at a
22 2005 standard for the one category in most dispute today,
23 maybe come back in 16 to 17 months, and the idea then would
24 be that we would have some time to see whether the technology
25 is moving forward and give us, instead of like a real quick
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1 return, a little bit more time and yet still plenty of time
2 to see where technology is going before the standard comes
3 into play.
4 CHAIRMAN DUNLAP: Jim, I appreciate the perspective
5 with that suggestion.
6 One thing I might, if the staff does see a problem
7 with it, I might offer up, to give you some comfort on the
8 issues, this has been common on this Board to have a Board
9 Member liaison on issues, as was done in the San Joaquin
10 Valley study, and our physician members involved with health
11 effect studies, if you are comfortable, perhaps Mr. Calhoun
12 and yourself could monitor or serve on some kind of a Board
13 Tracking Ad Hoc Group or something like that.
14 MR. KENNY: It would be also quite reasonable to
15 have either a Board Member serve as part of the work group to
16 work with the staff and the industry.
17 CHAIRMAN DUNLAP: Joe's expressed interest, and if
18 you would like to, you are welcome to sit in periodically and
19 participate and watch it yourself, and if you could get back
20 to the Board informally with it as soon as possible.
21 SUPERVISOR SILVA: Good idea. Thank you.
22 CHAIRMAN DUNLAP: Very good.
23 MS. EDGERTON: I have just one comment though.
24 There was a lot that was said, and it was very
25 touching about the family businesses and many years, and they
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1 have not changed.
2 Some of those products were formulated before there
3 was an Air Resources Board, before there was a Clean Air Act
4 in the United States of America, before we had twice the
5 growth in the South Coast, the type of which we have had, I
6 think 38 percent since 1971.
7 The world has changed. Our air has changed. The
8 laws have changed. We have all got to change.
9 While I am concerned about the pain of change, I do
10 not want to get confused. I am aware, and I think that the
11 hard message is that we are asking you to change.
12 Thank you.
13 CHAIRMAN DUNLAP: Okay. What I think I will do at
14 this juncture is that I will close the record on this Agenda
15 Item.
16 However, the record will be reopened when the
17 15-day notice of public availability is issued. Written or
18 oral comments received after this hearing date, before the
19 15-day notice is issued, will not be accepted as part of the
20 official record on this Agenda Item.
21 When the record is reopened for a 15-day comment
22 period, the public may submit written comments on the
23 proposed changes which will be considered and responded to in
24 the Final Statement of Reasons for the regulation.
25 Also, at this point we need to report ex parte
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1 communications. Do we have anything to report?
2 MR. CALHOUN: Yes.
3 Mr. Chairman, on Tuesday of this week, I met with
4 Mr. Meguiar and Mr. Silver of Meguiars. Our discussion was
5 essentially the same as their testimony here today.
6 CHAIRMAN DUNLAP: Okay. Very good.
7 Any other ex parte?
8 We have had a bit of a discussion. We have before
9 us a Resolution, 97-37, which contains the staff
10 recommendations.
11 Ms. Walsh, does the report and the amended items
12 that we discussed need to be included in this Resolution?
13 MS. WALSH: They are covered in the Resolution.
14 CHAIRMAN DUNLAP: The Chair would entertain a
15 motion and a second to move Resolution 97-37.
16 MS. EDGERTON: Move.
17 CHAIRMAN DUNLAP: Motion made by Ms. Edgerton and
18 seconded by Supervisor Roberts.
19 Any discussion?
20 SUPERVISOR RIORDAN: Just a brief note, for those
21 in the audience who have not seen the Resolution, embodied in
22 that Resolution is a paragraph on the working group, so it is
23 not something that we are just talking about, but it is
24 there, and it is part of the Resolution, part of that
25 record.
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1 I think that is important.
2 MAYOR HILLIGOSS: And things would come back to us.
3 CHAIRMAN DUNLAP: Right.
4 Mr. Kenny made a commitment to come back in 16 or
5 17 months. We have the Board representation on the work
6 group, if we desire, Supervisor Silva and Mr. Calhoun, I
7 think, we are covered there.
8 All right. Any further discussion?
9 Very good.
10 We will proceed with a voice vote. All those in
11 favor, say aye.
12 Opposed?
13 Very good. Motion carries.
14 Thank you very much. Thank you to the staff.
15 Fine job today. I appreciate the work.
16 Mike, Peter, good job.
17 We have one item remaining. We have an Open
18 Comment Period.
19 Does anyone in the audience wish to comment on any
20 item that was not on the Agenda today?
21 Very good.
22 Mr. Kenny, do you have anything else that you want
23 to add?
24 All right. Then the July meeting of the California
25 Air Resources Board is now adjourned.
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1 (Thereupon the Air Resources Board Meeting was
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1 CERTIFICATE OF SHORTHAND REPORTER
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4 I, VICKI L. MEDEIROS, a Certified Shorthand
5 Reporter of the State of California, do hereby certify:
6 That I am a disinterested person herein; that the
7 foregoing hearing was reported in shorthand by me, Vicki L.
8 Medeiros, a Certified Shorthand Reporter of the State of
9 California, and thereafter transcribed into typewriting.
10 I further certify that I am not of counsel or
11 attorney for any of the parties to said hearing nor in any
12 way interested in the outcome of said hearing.
13 IN WITNESS WHEREOF, I have hereunto set my hand
14 this fourth day of August, 1997.
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18 VICKI L. MEDEIROS
19 Certified Shorthand Reporter
20 License No. 7871
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